10-K
2.5falsehttp://fasb.org/us-gaap/2021-01-31#AccountingStandardsUpdate201602Member0000018498FYhttp://fasb.org/us-gaap/2021-01-31#AccountingStandardsUpdate201602Member2 years--01-2924 monthsMay 01, 2021May 31, 20250000018498us-gaap:CorporateNonSegmentMember2022-01-290000018498us-gaap:PreferredStockMember2019-02-032020-02-010000018498gco:ThreeNewDirectorsMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:InventoryValuationReserveMember2019-02-032020-02-010000018498gco:TwoThousandsNineEquityIncentivePlanMembergco:DirectorRetainerStockMember2019-02-032020-02-010000018498us-gaap:RetainedEarningsMember2020-02-022021-01-300000018498us-gaap:OperatingSegmentsMembergco:SchuhGroupSegmentMember2021-01-300000018498us-gaap:EmployeeStockOptionMembergco:TwoThousandTwentyEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-312022-01-290000018498gco:FacilityLetterMembergco:SchuhLimitedMembergco:RevolvingCapitalFacilityMember2020-10-090000018498us-gaap:IntersegmentEliminationMembergco:SchuhGroupSegmentMember2020-02-022021-01-300000018498us-gaap:EmployeeStockOptionMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:AdditionalPaidInCapitalMember2019-02-032020-02-010000018498gco:TwoThousandTwentyRestrictedCashIncentiveProgramMember2020-06-300000018498us-gaap:SubsequentEventMember2022-02-280000018498us-gaap:InventoryValuationReserveMember2019-02-020000018498us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-02-020000018498us-gaap:IntersegmentEliminationMembergco:SchuhGroupSegmentMember2021-01-312022-01-290000018498gco:LicensedBrandsSegmentMemberus-gaap:OperatingSegmentsMember2022-01-290000018498us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-312022-01-290000018498srt:MaximumMembergco:ComputerHardwareSoftwareAndEquipmentMember2021-01-312022-01-290000018498us-gaap:PreferredStockMember2019-02-020000018498srt:MaximumMembergco:TwoThousandTwentyEquityIncentivePlanMember2022-01-290000018498us-gaap:RestrictedStockMembergco:AdditiontotheTwoThousandNineEquityIncentivePlanMemberMember2020-02-022021-01-300000018498us-gaap:RevolvingCreditFacilityMember2021-01-312022-01-290000018498gco:JohnstonAndMurphyGroupSegmentMember2021-01-312022-01-290000018498us-gaap:TrademarksMember2021-01-300000018498us-gaap:RestrictedStockMember2022-01-290000018498gco:WholesaleCostsOfDistributionMember2021-01-312022-01-290000018498gco:TwoThousandNineEquityIncentivePlanMember2019-02-032020-02-010000018498us-gaap:PreferredStockMember2021-01-312022-01-290000018498gco:JohnstonAndMurphyGroupSegmentMember2020-02-022021-01-3000000184982019-01-302020-01-290000018498gco:SubordinatedSerialPreferredStockSeriesThreeMember2022-01-290000018498us-gaap:TrademarksMembergco:SchuhGroupSegmentMember2022-01-290000018498srt:MinimumMember2021-01-312022-01-290000018498gco:JourneysGroupSegmentMemberus-gaap:IntersegmentEliminationMember2021-01-312022-01-290000018498us-gaap:RestrictedStockMembergco:AdditiontotheTwoThousandNineEquityIncentivePlanMemberMember2019-02-032020-02-010000018498us-gaap:OperatingSegmentsMembergco:JourneysGroupSegmentMember2020-02-010000018498us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-312022-01-290000018498gco:NashvilleTennesseeMember2021-01-312022-01-290000018498us-gaap:AllowanceForCreditLossMember2021-01-300000018498us-gaap:DiscontinuedOperationsDisposedOfBySaleMembergco:LidsSportsGroupSegmentMember2021-01-312022-01-290000018498us-gaap:CommonStockMember2019-02-020000018498us-gaap:OperatingSegmentsMembergco:SchuhGroupSegmentMember2019-02-032020-02-010000018498us-gaap:CustomerListsMember2022-01-290000018498srt:DirectorMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498gco:InsuranceMember2021-01-312022-01-290000018498gco:SwinglineSubfacilityMembergco:ThirdAmendedandRestatedCreditAgreementMembergco:GCOCanadaUnlimitedLiabilityCompanyMember2022-01-290000018498gco:CoronavirusMembergco:UnitedKingdomTheRepublicOfIrelandAndCanadaMember2021-01-312022-01-290000018498us-gaap:ForeignCountryMember2022-01-290000018498srt:MinimumMemberus-gaap:ForeignCountryMember2021-01-312022-01-2900000184982020-01-302021-01-290000018498us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:EmployeeStockOptionMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:StateAndLocalJurisdictionMember2022-01-2900000184982022-03-110000018498us-gaap:RetainedEarningsMember2019-02-020000018498gco:NashvilleTennesseeMember2022-01-290000018498gco:SchuhGroupSegmentMember2020-05-020000018498us-gaap:LetterOfCreditMembergco:GenescoUkLimitedMembergco:ThirdAmendedandRestatedCreditAgreementMember2022-01-290000018498us-gaap:RestrictedStockMember2019-02-032020-02-010000018498us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-01-290000018498gco:JourneysGroupAndJohnstonAndMurphyGroupSegmentMember2020-02-022020-05-020000018498us-gaap:ShareBasedCompensationAwardTrancheThreeMemberus-gaap:EmployeeStockOptionMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:OperatingSegmentsMembergco:JourneysGroupSegmentMember2021-01-312022-01-290000018498us-gaap:CorporateNonSegmentMember2021-01-300000018498gco:SchuhGroupSegmentMember2020-02-022020-05-020000018498gco:RetailStoreAssetImpairmentsMember2021-01-312022-01-290000018498gco:LidsSportsGroupSegmentMembergco:SaleOfHeadquartersBuildingMember2019-02-032020-02-010000018498gco:TwoThousandsNineEquityIncentivePlanMembersrt:DirectorMember2019-02-032020-02-010000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2019-02-032020-02-010000018498country:CA2022-01-290000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2021-01-312022-01-290000018498gco:SchuhGroupSegmentMember2019-02-032020-02-0100000184982019-02-020000018498gco:ConversionOfPreferredStockMember2022-01-290000018498us-gaap:AllowanceForCreditLossMember2019-02-032020-02-010000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-312022-01-290000018498us-gaap:IntersegmentEliminationMember2021-01-312022-01-290000018498gco:ThirdAmendedandRestatedCreditAgreementMember2021-01-312022-01-290000018498gco:UKRevolverBorrowingsMember2021-01-300000018498gco:EmployeesPreferredStockPurchaseAccountsMember2022-01-290000018498gco:HurricaneMariaMember2019-02-032020-02-010000018498gco:RetailStoreAssetImpairmentsMembergco:SchuhGroupSegmentMember2019-02-032020-02-010000018498gco:RetailStoreAssetImpairmentsMembergco:SchuhGroupSegmentMember2021-01-312022-01-290000018498us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMember2020-02-022021-01-300000018498gco:EmployeesSubordinatedConvertiblePreferredStockMember2019-02-032020-02-010000018498us-gaap:AllowanceForCreditLossMember2022-01-290000018498gco:JohnstonAndMurphyGroupSegmentMembergco:RetailStoreAssetImpairmentsMember2019-02-032020-02-010000018498srt:MinimumMembergco:EmployeesSubordinatedConvertiblePreferredStockMember2021-01-312022-01-290000018498gco:CoronavirusMembercountry:GB2021-01-312022-01-290000018498gco:RetailOccupancyCostsMember2021-01-312022-01-290000018498gco:JohnstonAndMurphyGroupSegmentMemberus-gaap:IntersegmentEliminationMember2020-02-022021-01-300000018498us-gaap:ForeignCountryMember2021-01-300000018498gco:TwoThousandTwentyRestrictedCashIncentiveProgramMembergco:SharebasedCompensationAwardTrancheFourMember2021-01-312022-01-290000018498us-gaap:ForeignCountryMember2020-02-022021-01-300000018498gco:LicensedBrandsSegmentMemberus-gaap:OperatingSegmentsMember2021-01-300000018498gco:RetailOccupancyCostsMember2020-02-022021-01-300000018498us-gaap:RetainedEarningsMember2022-01-290000018498us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-02-032020-02-010000018498us-gaap:RevolvingCreditFacilityMember2022-01-290000018498gco:TogastAcquisitionMember2020-02-022021-01-300000018498us-gaap:RestrictedStockMember2021-01-312022-01-290000018498gco:JohnstonAndMurphyGroupSegmentMemberus-gaap:OperatingSegmentsMember2021-01-300000018498gco:TwoThousandsNineEquityIncentivePlanMembersrt:ChiefExecutiveOfficerMember2020-02-052020-02-050000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2019-02-032020-02-010000018498gco:SubordinatedCumulativePreferredStockMember2022-01-290000018498gco:JohnstonAndMurphyGroupSegmentMembergco:RetailStoreAssetImpairmentsMember2020-02-022021-01-300000018498us-gaap:CorporateNonSegmentMember2019-02-032020-02-010000018498gco:TwoThousandsNineEquityIncentivePlanMembersrt:DirectorMember2021-01-312022-01-290000018498gco:RetailStoreAssetImpairmentsMember2019-02-032020-02-010000018498gco:JohnstonAndMurphyGroupSegmentMember2019-02-032020-02-010000018498us-gaap:LetterOfCreditMember2022-01-290000018498us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-02-010000018498srt:MaximumMember2022-01-290000018498gco:TwoThousandsNineEquityIncentivePlanMembergco:DirectorRetainerStockMember2020-02-022021-01-300000018498gco:SubordinatedSerialPreferredStockSeriesSixMember2022-01-290000018498us-gaap:AdditionalPaidInCapitalMember2019-02-020000018498us-gaap:IntersegmentEliminationMember2019-02-032020-02-010000018498us-gaap:TreasuryStockMember2022-01-290000018498gco:LicensedBrandsSegmentMemberus-gaap:OperatingSegmentsMember2019-02-032020-02-010000018498gco:StatedValueOfIssuedSharesMember2021-01-300000018498gco:JohnstonAndMurphyGroupSegmentMemberus-gaap:IntersegmentEliminationMember2019-02-032020-02-010000018498us-gaap:AllowanceForCreditLossMember2021-01-312022-01-290000018498gco:StatedValueOfIssuedSharesMember2020-02-010000018498us-gaap:AdditionalPaidInCapitalMember2021-01-300000018498gco:TwoThousandTwentyRestrictedCashIncentiveProgramMember2021-01-312022-01-290000018498us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-02-022021-01-300000018498us-gaap:OperatingSegmentsMembergco:SchuhGroupSegmentMember2021-01-312022-01-290000018498gco:JourneysGroupSegmentMember2021-01-312022-01-290000018498us-gaap:InventoryValuationReserveMember2021-01-300000018498us-gaap:RestrictedStockMember2020-02-022021-01-300000018498us-gaap:CorporateNonSegmentMember2020-02-022021-01-300000018498gco:TwoThousandNineEquityIncentivePlanMember2020-02-022021-01-300000018498us-gaap:RestrictedStockMembergco:AdditiontotheTwoThousandNineEquityIncentivePlanMemberMember2021-01-312022-01-290000018498gco:EmployeesSubordinatedConvertiblePreferredStockMember2020-02-010000018498srt:MinimumMemberus-gaap:StateAndLocalJurisdictionMember2021-01-312022-01-290000018498us-gaap:OperatingSegmentsMembergco:JourneysGroupSegmentMember2019-02-032020-02-010000018498us-gaap:TrademarksMember2020-02-022021-01-300000018498gco:JourneysGroupSegmentMember2021-01-300000018498us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-02-032020-02-010000018498gco:StatedValueOfIssuedSharesMember2022-01-290000018498us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-290000018498us-gaap:StateAndLocalJurisdictionMember2021-01-300000018498gco:RetailStoreAssetImpairmentsMembergco:JourneysGroupSegmentMember2021-01-312022-01-290000018498gco:LicensedBrandsSegmentMemberus-gaap:OperatingSegmentsMember2020-02-010000018498us-gaap:CommonStockMember2020-02-022021-01-300000018498gco:LicensedBrandsSegmentMember2020-02-022021-01-300000018498us-gaap:CommonStockMember2020-02-010000018498us-gaap:CorporateNonSegmentMember2020-02-010000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2020-02-022021-01-300000018498us-gaap:SubsequentEventMember2022-03-230000018498gco:UKRevolverBorrowingsMember2022-01-290000018498us-gaap:InventoryValuationReserveMember2022-01-290000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMember2020-02-022021-01-300000018498us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-01-290000018498srt:MinimumMembergco:BuildingsAndBuildingEquipmentMember2021-01-312022-01-290000018498us-gaap:OperatingSegmentsMembergco:JourneysGroupSegmentMember2020-02-022021-01-300000018498gco:JourneysGroupSegmentMember2019-02-032020-02-010000018498us-gaap:RestrictedStockMembergco:SharebasedCompensationAwardTrancheFourMembergco:TwoThousandsNineEquityIncentivePlanMember2020-02-022021-01-300000018498srt:MinimumMember2022-01-290000018498us-gaap:RevolvingCreditFacilityMember2020-06-050000018498us-gaap:CorporateNonSegmentMember2021-01-312022-01-290000018498gco:LicensedBrandsSegmentMember2019-02-032020-02-010000018498gco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2021-01-312022-01-290000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMembergco:SharebasedCompensationAwardTrancheFourMember2019-02-032020-02-010000018498gco:RetailStoreAssetImpairmentsMembergco:JourneysGroupSegmentMember2020-02-022021-01-300000018498gco:AdditiontotheTwoThousandNineEquityIncentivePlanMemberMembersrt:DirectorMember2021-01-312022-01-290000018498gco:JourneysGroupAndJohnstonAndMurphyGroupSegmentMember2021-01-312022-01-290000018498gco:RevolvingCapitalFacilityMember2022-01-290000018498gco:JourneysGroupSegmentMember2022-01-290000018498us-gaap:AdditionalPaidInCapitalMember2020-02-022021-01-300000018498gco:RetailOccupancyCostsMember2019-02-032020-02-010000018498gco:EmployeesSubordinatedConvertiblePreferredStockMember2022-01-290000018498us-gaap:OtherIntangibleAssetsMember2022-01-290000018498us-gaap:IntersegmentEliminationMembergco:JourneysGroupSegmentMember2020-02-022021-01-300000018498gco:TwoThousandTwentyStockIncentivePlanMember2022-01-290000018498us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-02-022021-01-3000000184982021-07-310000018498us-gaap:CommonStockMember2021-01-312022-01-290000018498gco:USRevolverBorrowingsMember2022-01-290000018498us-gaap:RestrictedStockMember2020-02-010000018498us-gaap:InventoryValuationReserveMember2020-02-010000018498gco:PensionSettlementExpenseMember2019-02-032020-02-010000018498srt:MinimumMembergco:UnitedKingdomAndTheRepublicOfIrelandMember2022-01-290000018498gco:LeaseTerminationExpensesMember2019-02-032020-02-010000018498gco:UnitedStatesPuertoRicoAndCanadaMember2022-01-290000018498gco:EmployeesSubordinatedConvertiblePreferredStockMember2021-01-312022-01-290000018498srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-02-032020-02-010000018498us-gaap:RestrictedStockMembersrt:DirectorMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:AdditionalPaidInCapitalMember2020-02-010000018498gco:EmployeesSubordinatedConvertiblePreferredStockMember2022-01-290000018498gco:LicensedBrandsSegmentMemberus-gaap:OperatingSegmentsMember2021-01-312022-01-290000018498us-gaap:AllowanceForCreditLossMember2019-02-020000018498us-gaap:TreasuryStockMember2021-01-300000018498gco:ForeignSubsidiariesMember2021-01-300000018498gco:EmployeesPreferredStockPurchaseAccountsMember2020-02-010000018498gco:OtherMajorCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-01-312022-01-290000018498srt:MaximumMember2021-01-312022-01-290000018498gco:ProfessionalFeesRelatedToActionsOfActivistShareholderMember2021-01-312022-01-290000018498us-gaap:OperatingSegmentsMember2021-01-312022-01-290000018498us-gaap:CommonStockMember2021-01-300000018498gco:CoronavirusMember2021-01-312022-01-290000018498us-gaap:PreferredStockMember2020-02-0100000184982020-02-022021-01-300000018498gco:SubordinatedSerialPreferredStockAggregateMember2022-01-290000018498us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:RevolvingCreditFacilityMembersrt:MaximumMembergco:ThirdAmendedandRestatedCreditAgreementMember2022-01-290000018498us-gaap:OperatingSegmentsMembergco:JohnstonAndMurphyGroupSegmentMember2020-02-010000018498gco:CoronavirusMembercountry:GB2020-02-022021-01-300000018498us-gaap:CustomerListsMembergco:TogastMember2022-01-290000018498gco:TwoThousandTwentyRestrictedCashIncentiveProgramMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-01-312022-01-290000018498us-gaap:RestrictedStockMember2021-01-300000018498gco:CoronavirusMember2020-02-022021-01-300000018498us-gaap:OperatingSegmentsMembergco:JourneysGroupSegmentMember2022-01-290000018498country:GB2022-01-290000018498gco:LicensedBrandsSegmentMemberus-gaap:OperatingSegmentsMember2020-02-022021-01-300000018498gco:JohnstonAndMurphyGroupSegmentMemberus-gaap:OperatingSegmentsMember2022-01-290000018498srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-02-020000018498us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2019-02-032020-02-010000018498gco:LicensedBrandsSegmentMemberus-gaap:IntersegmentEliminationMember2019-02-032020-02-010000018498us-gaap:RetainedEarningsMember2021-01-300000018498srt:MaximumMembergco:UnitedKingdomAndTheRepublicOfIrelandMember2022-01-290000018498us-gaap:AllowanceForCreditLossMember2020-02-010000018498gco:DistributionWarehouseMember2021-01-312022-01-290000018498us-gaap:FurnitureAndFixturesMember2021-01-312022-01-290000018498us-gaap:CustomerListsMember2021-01-300000018498gco:LicensedBrandsSegmentMember2022-01-290000018498us-gaap:AdditionalPaidInCapitalMember2022-01-290000018498gco:SchuhGroupSegmentMember2021-01-312022-01-290000018498gco:SchuhGroupSegmentMemberus-gaap:IntersegmentEliminationMember2019-02-032020-02-010000018498gco:LeaseTerminationMember2019-02-032020-02-010000018498gco:TwoThousandsNineEquityIncentivePlanMembersrt:DirectorMember2020-02-022021-01-300000018498us-gaap:OperatingSegmentsMember2019-02-032020-02-010000018498us-gaap:RevolvingCreditFacilityMembersrt:MaximumMembergco:GCOCanadaUnlimitedLiabilityCompanyMembergco:ThirdAmendedandRestatedCreditAgreementMember2021-01-312022-01-290000018498gco:MajorCustomerOneMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-01-312022-01-290000018498gco:SharebasedCompensationAwardTrancheFourMemberus-gaap:EmployeeStockOptionMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMembersrt:DirectorMember2019-02-032020-02-010000018498us-gaap:IntersegmentEliminationMember2020-02-022021-01-3000000184982022-01-290000018498us-gaap:RevolvingCreditFacilityMembersrt:MaximumMembergco:ThirdAmendedandRestatedCreditAgreementMember2021-01-312022-01-290000018498gco:LicensedBrandsSegmentMemberus-gaap:IntersegmentEliminationMember2020-02-022021-01-300000018498gco:LicensedBrandsSegmentMember2021-01-300000018498gco:CoronavirusMember2020-05-032021-01-300000018498gco:JohnstonAndMurphyGroupSegmentMemberus-gaap:OperatingSegmentsMember2019-02-032020-02-010000018498us-gaap:AccountingStandardsUpdate201912Member2022-01-290000018498us-gaap:RevolvingCreditFacilityMembergco:USRevolverBorrowingsMember2022-01-290000018498gco:TwoThousandTwentyStockIncentivePlanMember2021-01-312022-01-290000018498us-gaap:DiscontinuedOperationsDisposedOfBySaleMembergco:LidsSportsGroupSegmentMember2022-01-290000018498us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-02-020000018498gco:USRevolverBorrowingsMember2021-01-300000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMember2019-02-032020-02-010000018498us-gaap:OperatingSegmentsMembergco:JohnstonAndMurphyGroupSegmentMember2020-02-022021-01-300000018498gco:SchuhGroupSegmentMember2020-02-022021-01-300000018498us-gaap:TrademarksMember2022-01-290000018498us-gaap:RevolvingCreditFacilityMembersrt:MaximumMembergco:GenescoUkLimitedMembergco:ThirdAmendedandRestatedCreditAgreementMember2021-01-312022-01-290000018498gco:FacilityLetterMembergco:RevolvingCapitalFacilityMember2020-10-092020-10-090000018498country:GB2020-02-010000018498srt:MaximumMemberus-gaap:EmployeeStockOptionMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:OperatingSegmentsMembergco:JourneysGroupSegmentMember2021-01-300000018498gco:JohnstonAndMurphyGroupSegmentMembergco:RetailStoreAssetImpairmentsMember2021-01-312022-01-290000018498gco:RetailStoreAssetImpairmentsMembergco:JourneysGroupSegmentMember2019-02-032020-02-010000018498us-gaap:PreferredStockMember2022-01-290000018498gco:SubordinatedSerialPreferredStockSeriesFourMember2022-01-290000018498us-gaap:LetterOfCreditMembergco:ThirdAmendedandRestatedCreditAgreementMembergco:GCOCanadaUnlimitedLiabilityCompanyMember2022-01-2900000184982021-01-312022-01-290000018498gco:RetailStoreAssetImpairmentsMembergco:SchuhGroupSegmentMember2020-02-022021-01-300000018498us-gaap:RestrictedStockMembergco:SharebasedCompensationAwardTrancheFourMembergco:TwoThousandsNineEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:PreferredStockMember2021-01-300000018498gco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2020-02-022021-01-300000018498us-gaap:InventoryValuationReserveMember2021-01-312022-01-290000018498us-gaap:CommonStockMember2022-01-290000018498us-gaap:AllowanceForCreditLossMember2020-02-022021-01-300000018498gco:TwoThousandTwentyRestrictedCashIncentiveProgramMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-312022-01-290000018498gco:JourneysGroupSegmentMemberus-gaap:IntersegmentEliminationMember2019-02-032020-02-010000018498gco:LicensedBrandsSegmentMember2021-01-312022-01-290000018498gco:JohnstonAndMurphyGroupSegmentMemberus-gaap:IntersegmentEliminationMember2021-01-312022-01-290000018498us-gaap:OperatingSegmentsMembergco:JohnstonAndMurphyGroupSegmentMember2021-01-312022-01-290000018498gco:SamsungCTAmericaIncorporationMember2022-01-290000018498us-gaap:CustomerConcentrationRiskMembergco:MajorCustomerTwoMemberus-gaap:AccountsReceivableMember2021-01-312022-01-290000018498us-gaap:TrademarksMembergco:JourneysGroupSegmentMember2022-01-290000018498gco:EmployeesSubordinatedConvertiblePreferredStockMember2021-01-300000018498us-gaap:RevolvingCreditFacilityMembergco:USRevolverBorrowingsMember2021-01-300000018498us-gaap:EmployeeStockOptionMember2019-02-032020-02-010000018498us-gaap:RestrictedStockMembergco:TwoThousandTwentyEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:CommonStockMember2019-02-032020-02-010000018498us-gaap:BridgeLoanMembergco:GenescoUkLimitedMembergco:ThirdAmendedandRestatedCreditAgreementMember2022-01-290000018498gco:MajorCustomerThreeMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-01-312022-01-290000018498us-gaap:OperatingSegmentsMembergco:SchuhGroupSegmentMember2020-02-010000018498us-gaap:TreasuryStockMember2020-02-010000018498gco:TwoThousandTwentyRestrictedCashIncentiveProgramMember2020-02-022021-01-300000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMembersrt:DirectorMember2020-02-022021-01-300000018498srt:MaximumMemberus-gaap:StateAndLocalJurisdictionMember2021-01-312022-01-290000018498us-gaap:TreasuryStockMember2019-02-020000018498gco:CoronavirusMembergco:SchuhGroupSegmentMember2020-02-022020-05-020000018498gco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2022-01-290000018498us-gaap:RetainedEarningsMember2021-01-312022-01-290000018498us-gaap:EmployeeStockOptionMember2021-01-312022-01-2900000184982021-01-300000018498us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-02-010000018498gco:WholesaleCostsOfDistributionMember2019-02-032020-02-010000018498gco:RetailStoreAssetImpairmentsMember2020-02-022021-01-300000018498us-gaap:OperatingSegmentsMembergco:SchuhGroupSegmentMember2022-01-290000018498country:GB2021-01-300000018498us-gaap:RestrictedStockMember2019-02-020000018498us-gaap:LetterOfCreditMembergco:ThirdAmendedandRestatedCreditAgreementMember2022-01-290000018498gco:EmployeesPreferredStockPurchaseAccountsMember2021-01-300000018498country:CA2021-01-300000018498gco:LicensedBrandsSegmentMemberus-gaap:IntersegmentEliminationMember2021-01-312022-01-290000018498us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-300000018498gco:ThirdAmendedandRestatedCreditAgreementMembergco:SubFacilityMember2022-01-290000018498us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMember2019-02-032020-02-010000018498us-gaap:RevolvingCreditFacilityMembergco:ThirdAmendedandRestatedCreditAgreementMember2022-01-290000018498us-gaap:InventoryValuationReserveMember2020-02-022021-01-3000000184982019-02-032020-02-010000018498srt:MinimumMembergco:ComputerHardwareSoftwareAndEquipmentMember2021-01-312022-01-290000018498srt:MaximumMembergco:BuildingsAndBuildingEquipmentMember2021-01-312022-01-290000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-02-022021-01-300000018498us-gaap:EmployeeStockOptionMember2020-02-022021-01-300000018498gco:TwoThousandTwentyRestrictedCashIncentiveProgramMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2021-01-312022-01-290000018498gco:WholesaleCostsOfDistributionMember2020-02-022021-01-300000018498us-gaap:RestrictedStockMembergco:TwoThousandsNineEquityIncentivePlanMember2021-01-312022-01-290000018498us-gaap:OtherIntangibleAssetsMember2021-01-3000000184982020-02-010000018498us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-300000018498us-gaap:RetainedEarningsMember2020-02-010000018498gco:SubordinatedSerialPreferredStockSeriesOneMember2022-01-290000018498gco:EmployeesSubordinatedConvertiblePreferredStockMember2020-02-022021-01-300000018498us-gaap:RevolvingCreditFacilityMembersrt:MaximumMembergco:ThirdAmendedandRestatedCreditAgreementMember2021-01-300000018498gco:ForeignSubsidiariesMember2022-01-290000018498country:CA2020-02-010000018498us-gaap:FairValueInputsLevel1Member2022-01-290000018498us-gaap:TrademarksMembergco:CoronavirusMember2020-02-022020-05-020000018498gco:FacilityLetterMembergco:SchuhLimitedMembergco:RevolvingCapitalFacilityMemberus-gaap:BaseRateMember2020-10-090000018498us-gaap:PensionPlansDefinedBenefitMember2021-01-312022-01-290000018498us-gaap:RevolvingCreditFacilityMembergco:GenescoUkLimitedMembergco:ThirdAmendedandRestatedCreditAgreementMember2022-01-290000018498us-gaap:RetainedEarningsMember2019-02-032020-02-010000018498srt:MaximumMemberus-gaap:ForeignCountryMember2021-01-312022-01-290000018498gco:JourneysGroupSegmentMember2020-02-022021-01-300000018498us-gaap:OperatingSegmentsMember2020-02-022021-01-300000018498us-gaap:OperatingSegmentsMembergco:SchuhGroupSegmentMember2020-02-022021-01-300000018498us-gaap:AdditionalPaidInCapitalMember2021-01-312022-01-29iso4217:USDxbrli:sharesxbrli:pureutr:sqftxbrli:sharesgco:Segmentutr:Hgco:Storegco:Customeriso4217:GBPgco:Optiongco:Voteiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended January 29, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the transition period from to

Commission File No. 1-3083

 

Genesco Inc.

(Exact name of registrant as specified in its charter)

Tennessee

 

62-0211340

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

Genesco Park,

1415 Murfreesboro Pike

 

37217-2895

Nashville,

Tennessee

 

(Zip Code)

(Address of principal executive offices)

 

 

 

Registrant’s telephone number, including area code: (615) 367-7000

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of Exchange

on which Registered

Common Stock, $1.00 par value

GCO

New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

Employees’ Subordinated Convertible Preferred Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer; an accelerated filer; a non-accelerated filer; a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging Growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter - $868,000,000. The market value calculation was determined using a per share price of $57.45, the price at which the common stock was last sold on the New York Stock Exchange on July 31, 2021, the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this calculation, shares of common stock held by nonaffiliates excludes only those shares beneficially owned by officers, directors, and shareholders owning 10% or more of the outstanding common stock (and, in each case, their immediate family members and affiliates).

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: As of March 11, 2022, 13,657,096 shares of the registrant’s common stock were outstanding.

Documents Incorporated by Reference

Certain portions of registrant’s Definitive Proxy Statement for its 2022 Annual Meeting of Shareholders (which is expected to be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s fiscal year ended January 29, 2022) are incorporated by reference into Part III of this Annual Report on Form 10-K..

 


 

TABLE OF CONTENTS

 

 

 

Page

PART I

 

Item 1.

Business

4

Item 1A.

Risk Factors

12

Item 1B.

Unresolved Staff Comments

27

Item 2.

Properties

27

Item 3.

Legal Proceedings

27

Item 4.

Mine Safety Disclosures

28

Item 4A.

Executive Officers

28

 

 

PART II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

30

Item 6.

Reserved

30

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

44

Item 8.

Financial Statements and Supplementary Data

45

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

86

Item 9A.

Controls and Procedures

86

Item 9B.

Other Information

86

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

86

 

 

PART III

 

Item 10.

Directors, Executive Officers and Corporate Governance

87

Item 11.

Executive Compensation

87

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

87

Item 13.

Certain Relationships and Related Transactions, and Director Independence

88

Item 14.

Principal Accounting Fees and Services

88

 

 

PART IV

 

Item 15.

Exhibits and Financial Statement Schedules

89

Item 16.

Form 10-K Summary

92

 

 

2


 

Cautionary Notice Regarding Forward-Looking Statements

This Annual Report on Form 10-K (this "report") includes certain forward-looking statements, which include statements regarding our intent, belief or expectations and all statements other than those made solely with respect to historical fact. Actual results could differ materially from those reflected by the forward-looking statements in this report and a number of factors may adversely affect the forward-looking statements and our future results, liquidity, capital resources or prospects. These include, but are not limited to, risks related to public health and safety issues, including, for example, risks related to the ongoing novel coronavirus ("COVID-19") pandemic; disruptions to our business, sales, supply chain and financial results; the level of consumer spending on our merchandise and interest in our brands and in general, the level and timing of promotional activity necessary to protect our reputation and maintain inventories at appropriate levels; the timing and amount of any share repurchases by us; risks related to doing business internationally, including the manufacturing of a portion of our products in China; the increasing scope of our non-U.S. operations; the imposition of tariffs on products imported by us or our vendors as well as the ability and costs to move production of products in response to tariffs; our ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs; a disruption in shipping or increase in cost of our imported products, and other factors affecting the cost of products; our dependence on third-party vendors and licensors for the products we sell; the effects of the withdrawal of the United Kingdom ("U.K.") from the European Union ("Brexit") and other sources of market weakness in the U.K. and the Republic of Ireland (the “ROI”); the effectiveness of our omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; labor shortages; the effects of inflation, including our ability to pass increased cost on to consumers; effects resulting from wars and other military operations; the evolving regulatory landscape related to our use of social media; the establishment and protection of our intellectual property; weakness in the consumer economy and retail industry; competition and fashion trends in our markets, including trends with respect to the popularity of casual and dress footwear; weakness in shopping mall traffic; any failure to increase sales at our existing stores, given our high fixed expense cost structure; and in our e-commerce businesses, risks related to the potential for terrorist events; changes in buying patterns by significant wholesale customers; changes in consumer preferences; our ability to continue to complete and integrate acquisitions; expand our business and diversify our product base; impairment of goodwill in connection with acquisitions; payment related risks that could increase our operating cost, expose us to fraud or theft, subject us to potential liability and disrupt our business; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor of certain leases; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include our ability to open additional retail stores, renew leases in existing stores, control or lower occupancy costs, to conduct required remodeling or refurbishment on schedule and at expected expense levels; realize anticipated cost savings, including rent savings; realize any anticipated tax benefits, and achieve expected digital gains and gain market share; deterioration in the performance of individual businesses or of our market value relative to our book value, resulting in impairments of fixed assets, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for our shares or for the retail sector in general; costs and reputational harm as a result of disruptions in our business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; uncertainty regarding the expected phase out of the London Interbank Offered Rate ("LIBOR"), and the cost and outcome of litigation, investigations and environmental matters that involve us. For a full discussion of risk factors, see Item 1A, "Risk Factors".

3


 

PART I

ITEM 1, BUSINESS

General

Genesco Inc., incorporated in 1934 in the State of Tennessee, is a leading retailer and wholesaler of branded footwear, apparel and accessories with net sales for Fiscal 2022 of $2.4 billion. During Fiscal 2022, we operated four reportable business segments (not including corporate): (i) Journeys Group, comprised of the Journeys®, Journeys Kidz® and Little Burgundy® retail footwear chains and e-commerce operations; (ii) Schuh Group, comprised of the Schuh retail footwear chain and e-commerce operations; (iii) Johnston & Murphy Group, comprised of Johnston & Murphy® retail operations, e-commerce operations and wholesale distribution of products under the Johnston & Murphy® brand; and (iv) Licensed Brands, comprised of the licensed Dockers®, Levi's®, and G.H. Bass® brands, as well as other brands we license for footwear. We also source, design, market and distribute footwear under our Johnston & Murphy brand and the licensed Levi's, Dockers and G.H. Bass brands, as well as other brands that we license for footwear to over 1,050 retail accounts in the United States, including a number of leading department, discount, and specialty stores.

At January 29, 2022, we operated 1,425 retail footwear and accessory stores located primarily throughout the United States and in Puerto Rico, but also including 92 footwear stores in Canada and 123 footwear stores in the U.K. and the ROI. We plan to open a total of approximately 41 new retail stores and to close approximately 46 retail stores in Fiscal 2023.

The following table sets forth certain additional information concerning our retail footwear and accessory stores during the five most recent fiscal years:

 

 

 

Fiscal
2018

 

 

Fiscal
2019

 

 

Fiscal
2020

 

 

Fiscal
2021

 

 

Fiscal
2022

 

Retail Stores

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of year

 

 

1,554

 

 

 

1,535

 

 

 

1,512

 

 

 

1,480

 

 

 

1,460

 

Opened during year

 

 

59

 

 

 

36

 

 

 

12

 

 

 

13

 

 

 

6

 

Closed during year

 

 

(78

)

 

 

(59

)

 

 

(44

)

 

 

(33

)

 

 

(41

)

End of year

 

 

1,535

 

 

 

1,512

 

 

 

1,480

 

 

 

1,460

 

 

 

1,425

 

 

Shorthand references to fiscal years (e.g., “Fiscal 2022”) refer to the fiscal year ended on the Saturday nearest January 31st in the named year (e.g., January 29, 2022). The terms "Company," "Genesco," "we," "our" or "us" as used herein and unless otherwise stated or indicated by context refer to Genesco Inc. and its subsidiaries. All information contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is referred to in this Item 1 of this report, is incorporated by such reference in Item 1.

COVID-19

In March 2020, the World Health Organization categorized the outbreak of COVID-19 as a pandemic. Impacts related to the COVID-19 pandemic were significantly adverse in Fiscal 2021 for the retail industry, our Company, our customers, and our employees. We experienced significant disruptions to our business in Fiscal 2021 due to the COVID-19 pandemic and related social distancing and shelter-in-place recommendations and mandates, which initially resulted in the temporary closure of a number of stores and furlough of our employees. These disruptions continued in Fiscal 2022 due to the impact of COVID-19, including the Omicron variant, and supply chain disruptions that led to staff shortages and inventory shortfalls. At the beginning of Fiscal 2022, the vast majority of our stores in North America had reopened, but all of the stores in the U.K. and the ROI remained closed. By the end of the second quarter of Fiscal 2022, or July 30, 2021, we were operating in substantially all retail locations.

4


 

The impacts of the COVID-19 pandemic on our business are discussed in further detail throughout this Business section, Item 1A - Risk Factors, and Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.

Strategy

Across our company, we aspire to create and curate leading footwear brands that represent style, innovation and self-expression and to be the destination for our consumers' favorite fashion footwear. Each of our businesses has a strong strategic position grounded in a deep and ever-evolving understanding of the customers it serves. We strive to build enduring relationships with our target customers, grounded in unparalleled consumer and market insights. We excite and constantly exceed expectations by delivering distinctive experiences and products, using our deep direct-to-consumer expertise across digital and physical channels. The strength of our concepts and the advantages we have built over time have established long-lasting leadership positions that make our footwear businesses outstanding on their own, but what they share through the benefit of synergies makes them even stronger together. We have aligned our footwear focused business around six pillars aimed at accelerating our transformation and leveraging synergies to drive growth and sustainable profitability, 1) accelerate digital to grow direct-to-consumer, 2) maximize the relationship between physical and digital channels, 3) build deeper consumer insights to strengthen customer relationships and brand equity, 4) intensify product innovation and trend insight efforts, 5) reshape the cost base to reinvest for future growth, and 6) pursue synergistic acquisitions that add growth and create shareholder value. We anticipate optimizing our store footprint in the future, concentrating on locations that we believe will be most productive, as well as closing certain stores, perhaps reducing the overall square footage and store count from current levels, but improving productivity in our existing locations and investing in technology and infrastructure to support omnichannel and digital retailing.

We have made acquisitions, including the acquisitions of the Schuh Group in June 2011, Little Burgundy in December 2015 and Togast in January 2020. Now that many of the challenges of the pandemic are behind us, we expect to concentrate our efforts on opportunities to leverage our direct-to-consumer capabilities to grow our branded platform and leverage its strategies.

More generally, we attempt to develop strategies to mitigate the risks we view as material, including those discussed under the caption “Forward Looking Statements,” above, and those discussed in Item 1A, "Risk Factors". Among the most important of these factors are those related to consumer demand. Conditions in the economy can affect demand, resulting in changes in sales and, as prices are adjusted to drive sales and manage inventories, in gross margins. Because fashion trends influencing many of our target customers can change rapidly, we believe that our ability to react quickly to those changes has been important to our success. Even when we succeed in aligning our merchandise offerings with consumer preferences, those preferences may affect results by, for example, driving sales of products with lower average selling prices or products which are more widely available in the marketplace and thus more subject to competitive pressures than our typical offering. Moreover, economic factors, such as inflation, the collateral effects of the COVID-19 pandemic, such as supply chain disruptions and increased logistics costs, and any future economic contraction and changes in tax policies, may reduce the consumer’s disposable income or his or her willingness to purchase discretionary items, and thus may reduce demand for our merchandise, regardless of our skill in detecting and responding to fashion trends. We believe our experience and discipline in merchandising and the buying power associated with our relative size and importance in the industry segments in which we compete are important factors in our ability to mitigate risks associated with changing customer preferences and other changes in consumer demand.

Segments

Journeys Group

The Journeys Group accounted for 65% of our net sales in Fiscal 2022. Journeys retail footwear stores target customers in the 13 to 22 year age group through the use of youth-oriented decor and multi-channel media. Journeys stores carry predominately branded merchandise across a wide range of prices. The Journeys Kidz retail footwear stores sell footwear and accessories

5


 

primarily for younger children, toddler age to 12 years old. Little Burgundy retail footwear stores sell footwear and accessories to fashion-oriented men and women in the 21 to 34 age group ranging from students to young professionals.

At January 29, 2022, Journeys Group operated 1,135 stores, including 869 Journeys stores, 229 Journeys Kidz stores and 37 Little Burgundy stores averaging approximately 2,000 square feet, located primarily in malls and factory outlet centers throughout the United States, Puerto Rico and Canada, selling footwear and accessories for young men, women and children. Journeys Group's e-commerce websites include the following: journeys.com, journeyskidz.com, journeys.ca and littleburgundyshoes.com. In Fiscal 2022, the Journeys Group closed a net of 24 stores.

Schuh Group

The Schuh Group accounted for 18% of our net sales in Fiscal 2022. Schuh Group stores target teenagers and young adults in the 16 to 24 year age group, selling a broad range of branded casual and athletic footwear along with a meaningful private label offering. At January 29, 2022, Schuh Group operated 123 Schuh stores, averaging approximately 4,825 square feet, which include both street-level and mall locations in the U.K. and the ROI. Schuh Group's e-commerce websites are schuh.co.uk, schuh.ie and schuh.eu. Schuh Group did not open or close any stores in Fiscal 2022.

Johnston & Murphy Group

The Johnston & Murphy Group accounted for 10% of our net sales in Fiscal 2022. The majority of Johnston & Murphy wholesale sales are of the Genesco-owned Johnston & Murphy brand, and all of the group’s retail sales are of Johnston & Murphy branded products.

Johnston & Murphy Retail Operations. At January 29, 2022, Johnston & Murphy operated 167 retail shops and factory stores primarily in the United States averaging approximately 1,925 square feet and selling footwear, apparel and accessories primarily for men in the 35 to 55 year age group, targeting business and professional customers. Johnston & Murphy retail shops are located primarily in higher-end malls and airports nationwide and sell a broad range of men’s dress and casual footwear, apparel and accessories. Women’s footwear and accessories are sold in select Johnston & Murphy locations. We also sell Johnston & Murphy products directly to consumers through e-commerce websites. The websites are johnstonmurphy.com and johnstonmurphy.ca. Footwear accounted for 59% of Johnston & Murphy retail sales in Fiscal 2022, with the balance consisting primarily of apparel and accessories. Johnston & Murphy Group closed a net of 11 shops and factory stores in Fiscal 2022.

Johnston & Murphy Wholesale Operations. Johnston & Murphy men’s and women's footwear and accessories are sold at wholesale, primarily to better department stores, independent specialty stores and e-commerce retailers. Johnston & Murphy’s wholesale customers offer the brand’s footwear for dress, dress casual, and casual occasions, with the majority of styles offered in these channels selling from $100 to $195.

Licensed Brands

The Licensed Brands segment accounted for 7% of our net sales in Fiscal 2022. Licensed Brands sales include footwear marketed under the Levi's brand, Dockers brand and G.H. Bass brand, among others. The Levi's brand license and the G.H. Bass brand license were entered into concurrently with the Togast acquisition. Levi's footwear is marketed to men, women and children through department and specialty stores and off-price retailers across the country as well as e-commerce retailers. Suggested retail prices for Levi's footwear generally range from $35 to $100. We have had the exclusive Dockers men’s footwear license in the United States since 1991, and our current license agreement with Dockers expires in 2024. Dockers footwear is marketed to men aged 30 to 55 through many of the same national retail chains that carry Dockers pants and sportswear and in department and specialty stores across the country. Suggested retail prices for Dockers footwear generally range from $50 to $90. Licensed Brands designs and sources licensed footwear under the Levi's and G.H. Bass brand names, among others, and provides services for the sourcing of FUBU licensed footwear. In the fourth quarter of Fiscal 2022, we signed three-year licensing agreements

6


 

with both STARTER and ETONIC to be their exclusive U.S. and Canadian footwear licensee for athletic footwear. We will design and manufacture the STARTER and ETONIC brands footwear for men, women and children with suggested retail prices ranging from $49 to $150 for Starter and $50 to $110 for Etonic. Licensed Brands e-commerce websites are nashvilleshoewarehouse.com and dockershoes.com.

Manufacturing and Sourcing

We rely on independent third-party manufacturers for production of our footwear products sold at wholesale and our Johnston & Murphy retail business. We source footwear and accessory products from foreign manufacturers located in Brazil, Canada, China, Hong Kong, India, Italy, Mexico, Pakistan, Portugal, Peru, Spain, Turkey and Vietnam. Our retail operations, excluding Johnston & Murphy, sell primarily branded products from third parties who source primarily overseas.

Competition

Competition is intense in the footwear and accessory industries. Our retail footwear and accessory competitors range from small, locally owned stores to regional and national department stores, discount stores, specialty chains, our vendors with their own direct-to-consumer channels and online retailers. We also compete with hundreds of footwear wholesale operations in the United States and throughout the world, most of which are relatively small, specialized operations, but some of which are large, more diversified companies. Some of our competitors have resources that are not available to us. Our success depends upon our ability to remain competitive with respect to the key factors of style, price, quality, comfort, brand loyalty, customer service, store location and atmosphere, technology, infrastructure and speed of delivery to support e-commerce and the ability to offer relevant products.

Licenses

We own our Johnston & Murphy® brand and own or license the trade names of our retail concepts either directly or through wholly-owned subsidiaries. The Dockers® footwear line, introduced in Fiscal 1993, is sold under a license agreement granting us the exclusive right to sell men’s footwear under the trademark in the United States, Canada and the Caribbean. The Dockers license agreement expires in 2024. We entered into a new license agreement with Levi Strauss & Co. in January 2020 for the right to sell men's, women's and children's footwear under the Levi's® trademark in the United States and the Caribbean. The initial term of the license agreement with respect to Levi's® trademarks is through November 30, 2024 with one additional four-year renewal term. We entered into a new license agreement for STARTER athletic footwear in September 2021. The initial term of the license is three years with a three-year renewal option, which would extend the partnership through December 31, 2027. We entered into a new license agreement with ETONIC brand in December 2021. The initial term of the license is three years with two three-year renewal options, which would extend the license through January 31, 2030. We license certain other footwear brands, mostly in foreign markets. License royalty income was not material in Fiscal 2022.

Wholesale Backlog

Most of the orders in our wholesale divisions are for delivery within 150 days. Historically, most of our business has been at-once, and as a result, the backlog at any one time has not necessarily been indicative of future sales. However, the current global supply chain environment has resulted in an increase in the backlog of orders for our wholesale operations, including unconfirmed customer purchase orders, from approximately $64.6 million as of February 27, 2021 to approximately $167.7 million as of February 26, 2022. Our backlog may be more vulnerable to cancellation than is typical due to the COVID-19 pandemic and related global supply chain issues.

7


 

Environmental, Social and Governance ("ESG") Initiatives

As a leading retailer and wholesaler of branded footwear, apparel and accessories, we strive to make a positive impact on our industry, our communities and our planet by committing to transparent, socially conscious, and sustainable business practices. We believe that our ESG practices should serve all of our stakeholders, including shareholders, employees, customers and business partners.

Through our ESG Program, we expect to continue to advance our sustainable business practices with the goal of consistently delivering products that exceed consumer expectations. We believe the progress of our ESG efforts is best served by disclosing goals and relevant metrics. During Fiscal 2023 we expect to complete our initial measurements or baselines for our greenhouse gas emissions and begin to establish targets and goals which can then be reported and measured against. In addition, we expect to issue our initial corporate sustainability report in Fiscal 2023.

 

Environmental

We are committed to reducing our impact on the environment by focusing on sustainability initiatives in our operations and throughout our supply chain and product lifecycle. To this end, in Fiscal 2022, we joined the Leather Working Group ("LWG"). The LWG is a not-for-profit organization responsible for the world's leading environmental certification for the leather manufacturing industry. As a member of the LWG, we apply holistic practices in the supply chain for leather manufacturing for our third-party manufacturers.

Human Capital

Our Employees

We had approximately 18,000 employees as of January 29, 2022 with approximately 15,000 employed in the United States and Canada, and approximately 3,000 in the U.K. and the ROI. The majority of our workforce consists of retail-based, customer-facing employees with approximately 70% part-time and 30% full-time as of January 29, 2022.

We consider our employees to be core to our success. Our values include treating our customers and each other with integrity, trust and respect, and creating an unrivaled home for talent and diversity to grow and succeed.

Workplace Health & Safety

We strive to provide a safe and healthy work environment for all employees. This has been critically important during the COVID-19 pandemic. Throughout Fiscal 2022, we continued to adapt and respond to the impacts of the COVID-19 pandemic across our various locations.

We maintained and updated the protocols put in place at the beginning of the pandemic, monitoring for compliance and making improvements and adjustments where needed. We took a number of steps to protect our employees and our customers including increased safety and cleaning protocols, social distancing policies, mask requirements, contact tracing, and on-site vaccination clinics.

These actions were important to continue to ensure the health and safety of our workforce and in ensuring the continuity of our operations.

Benefits and Compensation

We offer a comprehensive benefits package designed to meet the diverse needs of our employees and their families. This package includes many benefits dedicated to our employees’ physical and mental health and well-being as well as benefits designed to help employees build wealth and prepare for the future.

8


 

We also provide valuable benefits and protections based on the unique needs and interests of each individual employee such as domestic partner benefits, parental leave, adoption benefits, family building benefits, paid time for community service, financial assistance with emergencies, scholarship opportunities, matching gift contributions and a generous product discount.

Our compensation programs are designed to attract, retain and motivate employees. We provide short-term and long-term incentives to encourage and reward superior performance and also drive long-term shareholder value. We engage a nationally recognized outside compensation consulting firm to independently evaluate the effectiveness of our executive compensation programs and to provide benchmarking against our peers within the industry.

Diversity, Equity and Inclusion

We are committed to accelerating our diversity, equity, and inclusion efforts to make a meaningful difference for our employees, our customers, and our communities. Our commitment includes refining our diversity, equity, and inclusion strategy, actively engaging with, and supporting an expanded taskforce, investing in training and education for employees and leaders and supporting those in need. We have committed our diversity efforts to four overarching areas – community, talent, business practice and measurement.

 

Our work is ongoing as we continue to identify opportunities for improvement.

 

Employee Engagement

We conduct annual employee engagement surveys as well as other targeted surveys with various segments of our workforce to measure important aspects of the employee experience. The survey measures employee sentiment on a variety of topics including leadership, management, alignment, involvement, learning and development, social connection and work life blend, among others. The survey creates the opportunity to establish two-way communication and give employees a direct voice in influencing change. Our results indicate high participation rates and strong engagement scores. We remain committed to listening to and learning from our employees.

Training and Development

We provide employees with the opportunity to grow their careers and be rewarded for their contributions. We have a strong promote from within culture and target training and development that’s relevant to an employee’s current role as well as future roles to which they aspire.

Social Capital

 

We are committed to responsible sourcing practices in our supply chain. We depend on third-party vendors to produce the products we sell but strive to work only with those vendors who share our commitment to responsible practices, especially in their relationships with employees and their stewardship of the environment. Our supply chain and ethical practices policies are among the ways we seek to implement this commitment.

 

In 2021, we published a comprehensive human rights policy with its commitment to respecting human rights and belief in fundamental standards that support our commitment to treat our employees, customers and business partners with integrity, trust and respect. Our human rights policy addresses our internal business ethics and code of conduct policies and principles embedded in our business operations, and is guided by the United Nations Guiding Principles on Business and Human Rights, the UN Universal Declaration of Human Rights, and the Organization for Economic Cooperation and Development (OECD) Guidelines for Multi National Enterprises.

9


 

We also monitor chemicals and substances in our supply chain for compliance with legal and regulatory requirements consistent with our Environmental Policy and expect our contracted factories and suppliers to take a proactive stance in eliminating any hazardous chemicals or substances in the manufacture of our products.

Information Security and Cybersecurity

As part of our retail and wholesale activities, marketing campaigns, customer relationship efforts and use of some third-party partners, we may handle and process certain non-public personal information that customers provide to purchase products, enroll in promotional or marketing programs, register on websites, or otherwise communicate to us in the course of providing support. This may include phone numbers, email addresses, physical addresses, contact preferences, personal information stored on electronic devices, and certain payment related information, including credit and debit card data. We have removed the transmission, processing, and storage of credit card data from our environment through the use of hardware based end-to-end encryption along with tokenization.

We gather and retain information about our employees only as necessary to fulfill our responsibilities as an employer. We may share information about such persons with benefit and/or employee services vendors that assist with certain aspects of our human resources offering.

We maintain controls and safeguards to mitigate the risks to our systems and to protect this information and have made significant investments to improve our information security and privacy posture and keep pace with the everchanging and evolving risks to our systems and our information. For example, we have implemented hardware based end-to-end encryption with tokenization, multifactor authentication protocols, next generation firewalls, comprehensive cloud email security and endpoint protection, detection, and response software, conducted continuous risk assessments, and established data security breach preparedness and response plans. We also promote security awareness with our employees and require all endpoint users to successfully complete our annual security awareness training.

In addition to information security, we must comply with increasingly complex and demanding regulatory standards enacted to protect the privacy of business and personal data in the United States, Europe and other jurisdictions. For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which went into effect on May 25, 2018; and California enacted the California Consumer Privacy Act (the "CCPA") which went into effect on January 1, 2020, and additional jurisdictions are considering proposing or adopting similar regulations. These privacy laws impose additional requirements on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is stored or processed.

We have implemented processes and systems to allow for the expedient response and resolution of Data Subject Access Requests ("DSAR") in accordance with existing privacy laws and regulations that are applicable to our business, including GDPR and CCPA.

Compliance with these privacy laws and regulations can be costly and time consuming, and any failure to comply with these regulatory standards could subject us to legal and reputational risks. Failure to secure personal information could result in violation of data privacy laws and regulations, legal proceedings against us by governmental entities or others, issuance of fines by governmental authorities and damage to our reputation and credibility and could have a negative impact on revenues and profits.

Community

Building better communities is part of our everyday values. Our community outreach initiatives support underserved communities including our unique signature community outreach programs Cold Feet, Warm Shoes, the Make a Difference Charity Golf Tournament benefitting United Way, Journeys Attitude That Cares, and Schuh’s Purpose Pillar program. In addition, the Company and our employees engage through community sponsorship and leadership, and are proud of the recent community

10


 

recognition being named for the third consecutive year as a “Best Place to Work for LGBTQ+ Equality” by the Human Rights Campaign Foundation.

Governance

We have corporate governance mechanisms in place, along with internal controls over our financial reporting framework. We also have Enterprise Risk Management and Ethics and Compliance program frameworks, with annual updates provided to committees of our board of directors ("Board of Directors" or "Board") and our Board. To drive our ESG efforts, we have established an ESG/sustainability management and oversight framework under the direction of our Senior Vice President, Corporate Secretary and General Counsel. A subcommittee of the Nominating and Governance Committee of our Board oversees our ESG efforts.

Our commitment to diversity and inclusion is reflected in our Board, which is comprised of 56% of members who are diverse in either gender and/or ethnicity as of January 29, 2022. We are committed to efforts to expand our Board’s diversity.

Seasonality

Our business is seasonal with our investment in working capital normally reaching peaks in the spring and fall of each year and a significant portion of our net sales and operating income generated during the fourth quarter. The wholesale backlog is somewhat seasonal, reaching a peak in the spring. We maintain in-stock programs for selected product lines with anticipated high-volume sales.

Environmental Matters

Our former manufacturing operations and the sites of those operations as well as the sites of our current operations are subject to numerous federal, state, and local laws and regulations relating to human health and safety and the environment. These laws and regulations address and regulate, among other matters, wastewater discharge, air quality and the generation, handling, storage, treatment, disposal, and transportation of solid and hazardous wastes and releases of hazardous substances into the environment. In addition, third parties and governmental agencies in some cases have the power under such laws and regulations to require remediation of environmental conditions and, in the case of governmental agencies, to impose fines and penalties. Several of the facilities owned by us (currently or in the past) are located in industrial areas and have historically been used for extensive periods for industrial operations such as tanning, dyeing, and manufacturing. Some of these operations used materials and generated wastes that would be considered regulated substances under current environmental laws and regulations. We are currently involved in certain administrative and judicial environmental proceedings relating to our former facilities. See Note 16 to the Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data".

Available Information

We file reports with the Securities and Exchange Commission (“SEC”), including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other reports from time to time. We are an electronic filer and the SEC maintains an internet site at http://www.sec.gov that contains the reports, proxy and information statements, and other information filed electronically. Our website address, which is provided as an inactive textual reference only, is http://www.genesco.com. We make available free of charge through the website Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Copies of the charters of each of our Audit Committee, Compensation Committee, Nominating and Governance Committee as well as our Corporate Governance Guidelines and Code of Ethics along with position descriptions for our Board of Directors and Board committees are also available free of charge through the website. The information provided on our website is not part of this Annual Report on Form 10-K and is therefore not incorporated by reference unless such information is otherwise specifically incorporated elsewhere in this Annual Report on Form 10-K.

11


 

ITEM 1A, RISK FACTORS

Our business is subject to significant risks. You should carefully consider the risks and uncertainties described below and the other information in this Annual Report on Form 10-K, including our Consolidated Financial Statements and the notes to those statements. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we do not presently know about or that we currently consider immaterial may also affect our business operations and financial performance. If any of the events described below occur, our business, financial condition, cash flows or results of operations could be adversely affected in a material way. This could cause the trading price of our stock to decline, perhaps significantly, and you may lose part or all of your investment.

Competitive, Demand-Related and Reputational Risks

We experienced a material disruption to our business as a result of the COVID-19 pandemic and our sales, supply chain and financial results have been, and may continue to be materially adversely impacted.

Our business is subject to risks, or public perception of risks, arising from public health and safety crises, including pandemics, which have impacted, and may in the future impact, our wholesale and retail demand and supply chain. In response to the COVID-19 pandemic, we temporarily closed all of our North American stores on March 18, 2020 and we temporarily closed all of our stores in the U.K. and the ROI on March 23, 2020. Our wholesale partner stores also temporarily closed or substantially reduced operating hours in March of 2020. Beginning on May 1, 2020, we began reopening some of our stores based on pertinent state and local orders, and by August 1, 2020, we had reopened most of our stores, although some stores, notably in California, Canada, the U.K. and the ROI, were subject to further closures for varying periods. While all of our stores are now open, any future closures and their impact over the longer term are uncertain and cannot be predicted at this time. Any continuing effects of the COVID-19 pandemic depend on future developments outside our control such as emergence of new variants and the effectiveness of containment efforts, as well as the timing and availability of effective COVID-19 vaccines and other medical treatments. Even if the COVID-19 pandemic does not continue for an extended period, our business could be materially adversely affected by several additional factors related to the COVID-19 pandemic, including the following:

Reduced consumer demand and customer traffic in malls and shopping centers and reduced demand for our wholesale products from our retail partners;
The effects of the COVID-19 pandemic on the global economy, including a recession, or the deterioration of economic conditions in the markets in which we operate, or an increase in inflation or unemployment levels could result in customers having less disposable income which could lead to reduced sales of our products;
The effects of the COVID-19 pandemic could further delay inventory production and fulfillment and our release or delivery of new product offerings or require us to make unexpected changes to our offerings;
After the pandemic has subsided, fear of COVID-19, re-occurrence of outbreaks or another pandemic or similar crisis could cause customers to avoid public places where our stores are located such as malls, outlets, and airports; and
We may be required to revise certain accounting estimates and judgments such as, but not limited to, those related to the valuation of goodwill, long-lived assets and deferred tax assets, which could have a material adverse effect on our financial position and results of operations.

COVID-19 has also had and continues to have a significant impact on the countries, including China, from which we and our vendors source products. We and our vendors rely upon the facilities of third-party manufacturers in other countries to support our business. The outbreak resulted in significant governmental measures being implemented to control the spread of the virus, including, among others, restrictions on manufacturing and the movement of employees in many other countries. As a result of the COVID-19 pandemic and the measures designed to contain the spread of the virus, our and our vendors’ third-party manufacturers may not have the materials, capacity, or capability to manufacture our products according to our schedule and specifications. If third-party manufacturers’ operations are curtailed, we and our vendors may need to seek alternate manufacturing sources, which may be more expensive. Alternate sources may not be available or may result in delays in

12


 

shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations. While the disruptions and restrictions on the ability to travel, quarantines, and temporary closures of the facilities of third-party manufacturers and suppliers, as well as general limitations on movement, have eased or subsided, production and supply chain disruptions have continued, and the duration of such disruptions and the related financial impact cannot be estimated at this time. Should the production and distribution disruptions continue for a prolonged period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows.

Consumer spending is affected by poor economic conditions and other factors and may significantly harm our business, affecting our financial condition, liquidity, and results of operations.

The success of our business depends to a significant extent upon the level of consumer spending in general and on our product categories. A number of factors may affect the level of consumer spending on merchandise that we offer, including, among other things:

general economic and industry conditions, including the risks associated with recessions or other macroeconomic conditions and pressures such as inflation impacts and uncertainty related to the ongoing COVID-19 pandemic and Brexit;
weather conditions;
energy costs, which affect gasoline and home heating prices;
the level of consumer debt;
pricing of products;
interest rates;
tax rates, refunds and policies;
war, terrorism and other hostilities; and
consumer confidence in future economic conditions.

Adverse economic conditions and any related decrease in consumer demand for discretionary items could have a material adverse effect on our business, results of operations and financial condition. The merchandise we sell generally consists of discretionary items. Reduced consumer confidence and spending may result in reduced demand for discretionary items and may force us to take inventory markdowns, decreasing sales and making expense leverage difficult to achieve. In addition, inflationary cost pressure on the products we sell might limit our ability to pass on cost increases resulting in gross margin impact or reduced demand. Demand can also be influenced by other factors beyond our control.

Moreover, while we believe that our operating cash flows and borrowing capacity under committed lines of credit will be adequate for our anticipated cash requirements, if the economy were to experience a downturn, if one or more of our revolving credit banks were to fail to honor its commitments under our credit lines or if we were unable to draw on our credit lines for any reason, we could be required to modify our operations for decreased cash flow or to seek alternative sources of liquidity, and such alternative sources might not be available to us. These same factors could impact our wholesale customers, limiting their ability to buy or pay for merchandise offered by us.

Failure to protect our reputation could have a material adverse effect on our brand names.

Our success depends in part on the value and strength of the names of our business units. These names are integral to our businesses as well as to the implementation of our strategies for expanding our businesses. Maintaining, promoting, and positioning our brands will depend largely on the success of our marketing and merchandising efforts and our ability to provide high quality merchandise and a consistent, high quality customer experience. Our brands could be adversely affected if we fail to achieve these objectives or if our public image or reputation were to be tarnished by negative publicity or if adverse information concerning us is posted on social media platforms or similar mediums. Failure to comply, or accusation of failure to comply, with ethical, social, health, product, labor, data privacy, and environmental standards could also jeopardize our reputation and

13


 

potentially lead to various adverse consumer and employee actions. Any of these events could result in decreased revenue or otherwise adversely affect our business.

Our failure to appropriately address emerging environmental, social and governance matters could have a material adverse impact on our reputation and, as a result, our business.

There is an increased focus from investors, customers, employees, business partners and other stakeholders concerning ESG matters. The expectations related to ESG matters are rapidly evolving, and from time to time, we have announced and will announce certain ESG initiatives and goals. Our ESG efforts may not be perceived to be effective or we could be criticized for the scope of such initiatives or goals. In addition, we could fail to timely meet or accurately report our progress on such initiatives and goals. As a result, we could suffer negative publicity and our reputation could be adversely impacted, which in turn could have a negative impact on investor perception and our products' acceptance by consumers. This may also impact our ability to attract and retain talent to compete in the marketplace.

There is also uncertainty in the markets in which we operate regarding potential policies related to issues surrounding global environmental sustainability. Changes in the legal or regulatory environment affecting responsible sourcing, supply chain transparency, or environmental protection, among others, including regulations to limit carbon dioxide and other greenhouse gas emissions, to discourage the use of plastic or to limit or to impose additional costs on commercial water use may result in increased compliance costs for us and our business partners.

Our business involves a degree of risk related to fashion and other extrinsic demand drivers that are beyond our control.

The majority of our businesses serve a fashion-conscious customer base and depend upon the ability of our buyers and merchandisers to react to fashion trends, to purchase inventory that reflects such trends, and to manage our inventories appropriately in view of the potential for sudden changes in fashion, consumer taste, or other drivers of demand. Failure to execute any of these activities successfully could result in adverse consequences, including lower sales, product margins, operating income and cash flows.

Our future success also depends on our ability to respond to changing consumer preferences, identify and interpret consumer trends, and successfully market new products.

The industry in which we operate is subject to rapidly changing consumer preferences. The continued popularity of our footwear and the development and selection of new lines and styles of footwear with widespread consumer appeal, requires us to accurately identify and interpret changing consumer trends and preferences, and to effectively respond in a timely manner. Continuing demand and market acceptance for both existing and new products are uncertain and depend on substantial investment in product innovation, design and development, an ongoing commitment to product quality and significant and sustained marketing efforts and expenditures.

In assessing our response to anticipated changing consumer preferences and trends, we frequently must make decisions about product designs and marketing expenditures months in advance of the time when actual consumer acceptance can be determined. As a result, we may not be successful in responding to shifting consumer preferences and trends with new products that achieve market acceptance. If we fail to identify and interpret changing consumer preferences and trends, or are not successful in responding to these changes with the timely development or sourcing of products that achieve market acceptance, we could experience excess inventories and higher than normal markdowns, returns, order cancellations or an inability to profitably sell our products.

Our results may be adversely affected by declines in consumer traffic in malls.

The majority of our stores are located within shopping malls and depend to varying degrees on consumer traffic in the malls to generate sales. Declines in mall traffic, whether caused by a shift in consumer shopping preferences or by other factors, such as

14


 

COVID-19, may negatively impact our ability to maintain or grow our sales in existing stores, which could have an adverse effect on our financial condition or results of operations.

Our results of operations are subject to seasonal and quarterly fluctuations.

Our business is seasonal, with a significant portion of our net sales and operating income generated during the fourth quarter, which includes the holiday shopping season. Because of this seasonality, we have limited ability to compensate for shortfalls in fourth quarter sales or earnings by changes in our operations or strategies in other quarters. Adverse events outside of our control, such as supply chain interruptions, increased labor costs and labor availability, decreased consumer traffic (as a result of the COVID-19 pandemic or otherwise) or deteriorating economic conditions could result in lower than expected sales during the holiday shopping season or other periods in which we experience higher net sales, which could materially impact our financial condition and results of operations. Our quarterly results of operations also may fluctuate significantly based on other factors such as:

the timing of any new store openings and renewals;
the amount of net sales contributed by new and existing stores;
the timing of certain holidays and sales events;
changes in quarter end dates due to the 53-week year;
changes in our merchandise mix;
weather conditions that affect consumer spending; and
actions of competitors, including promotional activity.

A failure to increase sales at our existing stores, given our high fixed expense cost structure, and in our e-commerce businesses may adversely affect our stock price and impact our results of operations.

A number of factors have historically affected, and will continue to affect, our comparable sales results and gross margin, including:

consumer trends, such as less disposable income due to the impact of economic conditions, tax policies and other factors;
the lack of new fashion trends to drive demand in certain of our businesses and the ability of those businesses to adjust to fashion changes on a timely basis;
closing of department stores that anchor malls or a significant number of non-anchor mall formats;
competition;
declining mall traffic due to changing customer preferences in the way they shop;
timing of holidays including sales tax holidays and the timing of tax refunds;
general regional and national economic conditions;
inclement weather;
new merchandise introductions and changes in our merchandise mix;
our ability to distribute merchandise efficiently to our stores;
timing and type of sales events, promotional activities or other advertising;
our ability to adapt to changing customer preferences in the ways they digitally shop;
access to allocated product from our vendors;
our ability to execute our business strategy effectively; and
other external events beyond our control, such as COVID-19.

Our comparable sales have fluctuated in the past, including the composition of our comparable sales between store and digital, and we believe such fluctuations may continue. The unpredictability of our comparable sales may cause our revenue and results of operations to vary from quarter to quarter, and an unanticipated change in revenues or operating income may cause our stock price to fluctuate significantly.

15


 

Changes in the retail industry could have a material adverse effect on our business or financial condition.

In recent years, the retail industry has experienced consolidation, store closures, bankruptcies and other ownership changes. In the future, retailers in the U.S. and in foreign markets may further consolidate, undergo restructurings or reorganizations, or realign their affiliations, any of which could decrease the number of stores that carry our products or our licensees’ products or increase the ownership concentration within the retail industry. Changing shopping patterns, including the rapid expansion of online retail shopping, have adversely affected customer traffic in mall and outlet centers. We expect competition in the e-commerce market will continue to intensify. Growth in e-commerce could result in financial difficulties, including store closures, bankruptcies or liquidations for our brick-and-mortar stores and those of our wholesale customers who fail to compete effectively in the e-commerce market. We cannot control the success of individual malls, and an increase in store closures by other retailers may lead to mall bankruptcies, mall vacancies and reduced foot traffic. A continuation or worsening of these trends could cause financial difficulties for one or more of our segments, which, in turn, could substantially increase our credit risk and have a material adverse effect on our results of operations, financial condition and cash flows.

Our future success will be determined, in part, on our ability to manage the impact of the rapidly changing retail environment and identify and capitalize on retail trends, including technology, enhanced digital capabilities, e-commerce and other process efficiencies that will better service our customers.

Our business is intensely competitive and increased or new competition could have a material adverse effect on us.

The retail footwear and accessory markets are intensely competitive. We currently compete against a diverse group of retailers, including other regional and national specialty stores, department and discount stores, small independents and e-commerce retailers, as well as our own vendors who are increasingly selling direct-to-consumers, which sell products similar to and often identical to those we sell. Our branded businesses, selling footwear at wholesale, also face intense competition, both from other branded wholesale vendors and from private label initiatives of their retailer customers. A number of different competitive factors could have a material adverse effect on our business, including:

increased operational efficiencies of competitors;
competitive pricing strategies;
expansion by existing competitors;
expansion of direct-to-consumer selling by our vendors;
entry by new competitors into markets in which we currently operate; and
adoption by existing retail competitors of innovative store formats or sales methods.

Investments and Infrastructure Risks

We face a number of risks in opening new stores and renewing leases on existing stores.

We may open new stores, both in regional malls, where most of the operational experience of our U.S. businesses lies, and in other venues including outlet centers, major city street locations, airports, other off-mall locations and tourist destinations. We cannot offer assurances that we will be able to open as many stores as we have planned, that any new store will achieve similar operating results to those of our existing stores or that new stores opened in markets in which we operate will not have a material adverse effect on the revenues and profitability of our existing stores. In addition to the risks already discussed for existing stores, the success of any planned expansion will be dependent upon numerous factors, many of which are beyond our control, including the following:

our ability to identify suitable markets and individual store sites within those markets;
the competition for suitable store sites;
our ability to negotiate favorable lease terms for new stores and renewals (including rent and other costs) with landlords;

16


 

our ability to obtain governmental and other third-party consents, permits and licenses necessary to the operation of our stores or otherwise;
the ability to build and remodel stores on schedule and at acceptable cost;
the availability of employees to staff new stores and our ability to hire, train, motivate and retain store personnel;
the effect of changes to laws and regulations, including wage, over-time, and employee benefits laws on store expense;
the availability of adequate management and financial resources to manage an increased number of stores;
our ability to adapt our distribution and other operational and management systems to an expanded network of stores; and
unforeseen events, such as COVID-19, could prevent or delay store openings and impact our liquidity needed for store openings.

Additionally, the results we expect to achieve during each fiscal quarter are dependent upon opening new stores and renewing leases on existing stores on schedule. If we fall behind new store openings, we will lose expected sales and earnings between the planned opening date and the actual opening and may further complicate the logistics of opening stores, possibly resulting in additional delays, seasonally inappropriate product assortments, and other undesirable conditions.

Any acquisitions we make or new businesses we launch, as well as any dispositions of assets or businesses, involve a degree of risk.

Acquisitions have been a component of our growth strategy in recent years, and we expect that we may continue to engage in acquisitions or launch new businesses to grow our revenues and meet our other strategic objectives. If acquisitions are not successfully integrated with our business, our ongoing operations could be adversely affected. Additionally, acquisitions or new businesses may not achieve desired profitability objectives or result in any anticipated successful expansion of the businesses or concepts, causing lower than expected earnings and cash flow and potentially requiring impairment of goodwill and other intangibles. Although we review and analyze assets or companies we acquire, such reviews are subject to uncertainties and may not reveal all potential risks. Additionally, although we attempt to obtain protective contractual provisions, such as representations, warranties and indemnities, in connection with acquisitions, we cannot offer assurance that we can obtain such provisions in our acquisitions or that they will fully protect us from unforeseen costs of, or liabilities associated with, the acquisitions. We may also incur significant costs and diversion of management time and attention in connection with pursuing possible acquisitions even if the acquisition is not ultimately consummated.

Additionally, we have in the past and may in the future divest assets or businesses. Following any such divestitures, we may retain or incur liabilities or costs relating to our previous ownership of the assets or business that we sell. Any required payments on retained liabilities or indemnification obligations with respect to past or future asset or business divestitures could have a material adverse effect on our business or results of operations. Dispositions may also involve our continued financial involvement in the divested business, such as through transition services agreements and guarantees. Under these arrangements, performance by the divested businesses or conditions outside our control could adversely affect our business and results of operations.

Further, acquisitions and dispositions are often structured such that the purchase price paid or received by us, as applicable, is subject to post-closing adjustments, whether as a result of net working capital adjustments, contingent payments (i.e., earn-outs) or otherwise. Any such adjustments could result in a material change in the consideration paid to or received by us, as applicable, in such transactions.

Goodwill recorded with acquisitions is subject to impairment which could reduce the Company's profitability.

In connection with acquisitions, we record goodwill on our Consolidated Balance Sheets. This asset is not amortized but is subject to an impairment test at least annually, where we have the option first to assess qualitative factors to determine whether

17


 

events and circumstances indicate that it is more likely than not that goodwill is impaired. If after such assessment we conclude that the asset is impaired, we are required to determine the fair value of the asset using a quantitative impairment test that is based on projected future cash flows from the acquired business discounted at a rate commensurate with the risk we consider to be inherent in our current business model. We perform the impairment test annually at the beginning of our fourth quarter, or more frequently if events or circumstances indicate that the value of the asset might be impaired.

Deterioration in our equity market value, whether related to our operating performance or to disruptions in the equity markets or deterioration in the operating performance of the business unit with which goodwill is associated, which could be caused by events such as, but not limited to, COVID-19, could cause us to recognize the impairment of some or all of the $38.6 million of goodwill on our Consolidated Balance Sheets at January 29, 2022, resulting in the reduction of net assets and a corresponding non-cash charge to earnings in the amount of the impairment.

Technology, Data Security and Privacy Risks

The operation of our business is heavily dependent on our information systems.

We depend on a variety of information technology systems for the efficient functioning of our business (including our multiple e-commerce websites) and security of information. Much information essential to our business is maintained electronically, including competitively sensitive information and potentially sensitive personal information about customers and employees.

Despite our preventative efforts, our IT systems and websites may, from time to time be vulnerable to damage or interruption from events such as difficulties in replacing or integrating the systems of acquired businesses, computer viruses, security breaches and power outages.

Our insurance policies may not provide coverage for security breaches and similar incidents or may have coverage limits which may not be adequate to reimburse us for losses caused by security breaches. We also rely on certain hardware and software vendors, including cloud-service providers, to maintain and periodically upgrade many of these systems so that they can continue to support our business. The software programs supporting many of our systems are licensed to us by independent software companies. The inability of our employees and developers or our inability to continue to maintain and upgrade these information systems and software programs could disrupt or reduce the efficiency of our operations. In addition, costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations or leave us vulnerable to security breaches.

We also rely heavily on our information technology staff. If we cannot meet our staffing needs in this area, we may not be able to fulfill our technology initiatives or to provide maintenance on existing systems.

We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business.

As a retailer who accepts payments using a variety of methods, including credit and debit cards, installment payment methods, PayPal, and gift cards, we are subject to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers. The regulatory environment related to information security and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result in additional costs or accelerate these costs with additional legal and financial exposure for noncompliance. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which increase over time and raise our operating costs. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, and

18


 

other forms of electronic payment. If these companies become unable to provide these services to us, or if their systems are compromised, it could disrupt our business.

The payment methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized access to or exploit any weaknesses that may exist in the payment systems. We completed the implementation of Europay, Mastercard and Visa ("EMV") technology and received certification in Fiscal 2018; however future upgrades to our Company's systems could expose us to the fraudulent use of credit cards and increased costs, including possible fines and restrictions on our Company's ability to accept payments by credit or debit cards, if we were not to receive recertification. Because we accept debit and credit cards for payment, we are also subject to industry data protection standards and protocols, such as the Payment Card Industry Data Security Standards (“PCI DSS”), issued by the Payment Card Industry Security Standards Council. Additionally, we have implemented technology in our stores to allow for the acceptance of EMV credit transactions and point-to-point encryption. Complying with PCI DSS standards and implementing related procedures, technology and information security measures require significant resources and ongoing attention. However, even if we comply with PCI DSS standards and offer EMV and point-to-point encryption technology in our stores, we may be vulnerable to, and unable to detect and appropriately respond to, data security breaches and data loss, including cybersecurity attacks or other breach of cardholder data.

In addition, the Payment Card Industry (“PCI”) is controlled by a limited number of vendors who have the ability to impose changes in the PCI’s fee structure and operational requirements on us without negotiation. Such changes in fees and operational requirements may result in our failure to comply with PCI DSS, and cause us to incur significant unanticipated expenses.

A privacy breach, through a cybersecurity incident or otherwise, or failure to comply with privacy laws could materially adversely affect our business.

As part of normal operations, we and our third-party vendors and partners, receive and maintain confidential and personally identifiable information (“PII”) about our customers and employees, and confidential financial, intellectual property, and other information. We regard the protection of our customer, employee, and company information as critical. The regulatory environment surrounding information security and privacy is very demanding, with the frequent imposition of new and changing requirements some of which involve significant costs to implement and significant penalties if not followed properly. Despite our efforts and technology to secure our computer network and systems, a cybersecurity breach, whether targeted, random, or inadvertent, and whether at the hands of cyber criminals, hackers, rogue employees or other persons, may occur and could go undetected for a period of time, resulting in a material disruption of our computer network, a loss of information valuable to our business, including without limitation customer or employee PII, and/or theft. A similar cybersecurity breach to the computer networks and systems of our third-party vendors and partners, including those that are cloud-based, over which we have no control, may occur, and could lead to a material disruption of our computer network and/or the areas of our business that are dependent on the support, services and other products provided by our third-party vendors and partners. Our computer networks and our business may be adversely affected by such a breach of our third-party vendors and partners, which could result in a decrease in our e-commerce sales and/or a loss of information valuable to our business, including, without limitation, PII of customers or employees. Such a cyber-incident could result in any of the following:

theft, destruction, loss, misappropriation, or release of confidential financial and other data, intellectual property, customer awards, or customer or employee information, including PII such as payment card information, email addresses, passwords, social security numbers, home addresses, or health information;
operational or business delays resulting from the disruption of our e-commerce sites, computer networks or the computer networks of our third-party vendors and partners and subsequent material clean-up and mitigation costs and activities;
negative publicity resulting in material reputation or brand damage with our customers, vendors, third-party partners or industry peers;
loss of sales, including those generated through our e-commerce websites; and
governmental penalties, fines and/or enforcement actions, payment and industry penalties and fines and/or class action and other lawsuits.

19


 

Any of the above risks, individually or in aggregation, could materially damage our reputation and result in lost sales, governmental and payment card industry fines, and/or class action and other lawsuits. Although we carry cybersecurity insurance, in the event of a cyber-incident, that insurance may not be extensive enough or adequate in scope of coverage or amount to reimburse us for damages we may incur. Further, a significant breach of federal, state, provincial, local or international privacy laws could have a material adverse effect on our reputation.

Data protection requirements are constantly evolving and these requirements could adversely affect our business and operating results.

We have access to collect or maintain information about our customers, and the protection of that data is critical to our business. The regulatory environment surrounding information security and privacy continues to evolve and new laws are increasingly giving customers the right to control how their personal data is used. One such law is the European Union's General Data Protection Regulation ("GDPR"). Our failure to comply with the obligations of GDPR and similar U.S. federal and state laws, including California privacy laws, could in the future result in significant penalties which could have a material adverse effect on our business and results of operations. Data protection compliance could also cause us to incur substantial costs, forego a substantial amount of revenue or be subject to business risk associated with system changes and new business processes.

Operational, Supply Chain and Third-Party Risks

Increased operating costs, including wage increases resulting from potential increases in the minimum wage or competitive pressures, could have an adverse effect on our results.

Increased operating costs, including wage increases resulting from potential increases in the minimum wage or wage increases reflecting competition in relevant labor markets, store occupancy costs, distribution center costs and other expense items, including healthcare costs, may reduce our operating margin, and make it more difficult to identify new store locations that we believe will meet our investment return requirements. In addition, other employment and healthcare law changes may increase the cost of provided retirement and healthcare benefits expenses. Increases in our overall employment costs could have a material adverse effect on the Company’s business, results of operations and financial and competitive position.

If we lose key members of management or are unable to attract and retain the talent required for our business, our operating results could suffer.

Our performance depends largely on the efforts and abilities of members of our management team. Our executives have substantial experience and expertise in our business and have made significant contributions to our growth and success. The unexpected future loss of services of one or more key members of our management team could have an adverse effect on our business. In addition, future performance will depend upon our ability to attract, retain and motivate qualified employees, including store personnel and field management. If we are unable to do so, our ability to meet our operating goals may be compromised. Finally, our stores are decentralized, are managed through a network of geographically dispersed management personnel and historically experience a high degree of turnover. If we are for any reason unable to maintain appropriate controls on store operations due to turnover or other reasons, including the ability to control losses resulting from inventory and cash shrinkage, our sales and operating margins may be adversely affected. There can be no assurance that we will be able to attract and retain the personnel we need in the future.

The loss of, or disruption in, one of our distribution centers and other factors affecting the distribution of merchandise, including freight cost, could materially adversely affect our business.

Each of our divisions uses a single distribution center to handle all or a significant amount of its merchandise. Most of our operations’ inventory is shipped directly from suppliers to our operations' distribution centers, where the inventory is then processed, sorted and shipped to our stores, to our wholesale customers or to our e-commerce customers. We depend on the

20


 

orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules and effective management of the distribution centers. Although we believe that our receiving and distribution processes are efficient and well positioned to support our current business and potential expansions, we cannot offer assurance that we have anticipated all of the changing demands that our expanding operations, particularly our e-commerce operations, will impose on our receiving and distribution system, or that events beyond our control, such as disruptions in operations due to fire or other catastrophic events, labor disagreements or shortages or shipping problems (whether in our own or in our third party vendors’ or carriers’ businesses), will not result in delays in the delivery of merchandise to our stores or to our wholesale customers or e-commerce/retail customers. In addition, to the extent we need to add capacity to distribution centers by either leasing or building new distribution centers or adding capacity at existing centers or make changes in our distribution processes to improve efficiency and maximize capacity, we cannot assure that these changes will not result in unanticipated delays or interruptions in distribution. We depend upon third-parties for shipment of a significant amount of merchandise. Interruptions in the services provided by third-parties may occasionally result from damage or destruction to our distribution centers; weather-related events; natural disasters; pandemics; trade policy changes or restrictions; tariffs or import-related taxes; third-party labor disruptions; shipping capacity constraints; third-party contract disputes; military conflicts; acts of terrorism; or other factors beyond our control. An interruption in service by third-parties for any reason could cause temporary disruptions in our business, a loss of sales and profits, and other material adverse effects.

Our freight costs are impacted by changes in fuel prices, surcharges and other factors which can affect cost both on inbound freight from vendors to our distribution centers and outbound freight from our distribution centers to our stores and customers. Increases in freight costs, including in connection with increased fuel prices, may increase our cost of goods sold and our selling and administrative expenses.

An increase in the cost or a disruption in the flow of our imported products could adversely affect our business.

Merchandise originally manufactured and imported from overseas makes up a large proportion of our total inventory. A disruption in the shipping of our imported merchandise or an increase in the cost of those products may significantly decrease our sales and profits. We may be unable to meet customer demands or pass on price increases to our customers. In addition, if imported merchandise becomes more expensive or unavailable, the transition to alternative sources may not occur in time to meet demand. Products from alternative sources may also be of lesser quality or more expensive than those we currently import. Risks associated with our reliance on imported products include:

disruptions in the shipping and importation of imported products because of factors such as:
raw material shortages, work stoppages, strikes and political unrest;
problems with oceanic shipping, including shipping container shortages and delays in ports;
increased customs inspections of import shipments or other factors that could result in penalties causing delays in shipments;
economic crises, natural disasters, pandemics (including COVID-19), international disputes and wars; and
increases in the cost of purchasing or shipping foreign merchandise resulting from:
imposition of additional cargo or safeguard measures;
denial by the United States of “most favored nation” trading status to or the imposition of quotas or other restriction on imports from a foreign country from which we purchase goods;
changes in import duties, import quotas and other trade sanctions; and
increases in shipping rates.

Some of the inventory we sell is imported from China, which has historically been subject to efforts to increase duty rates or to impose restrictions on imports of certain products.

21


 

If we or our suppliers or licensees are unable to source raw materials or finished goods from the countries where we or they wish to purchase them, either because of a regulatory change or for any other reason, or if the cost of doing so should increase, it could have a material adverse effect on our sales and earnings.

A small portion of the products we buy abroad is priced in foreign currencies and, therefore, we are affected by fluctuating currency exchange rates. In the past, we have entered into foreign currency exchange contracts with major financial institutions to hedge these fluctuations. We may not be able to effectively protect ourselves in the future against currency rate fluctuations. Even dollar-denominated foreign purchases may be affected by currency fluctuations to reflect appreciation in the local currency against the dollar in the price of the products that they provide. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information about our foreign currency exchange rate exposure and any hedging activities.

We are dependent on third-party vendors and licensors for the merchandise we sell.

We do not manufacture the merchandise we sell, and our Licensed Brands business is dependent on third-party licenses. Accordingly, our product supply is subject to the ability and willingness of third-party suppliers to deliver merchandise we order on time and in the quantities and of the quality we need. In addition, a material portion of our retail footwear sales consists of products marketed under brands belonging to unaffiliated vendors, which have fashion significance to our customers. If those vendors were to decide not to sell to us or to limit the availability of their products to us, or if they become unable because of economic conditions, COVID-19, work stoppages, labor shortages, strikes, political unrest, raw materials supply disruptions, or any other reason to supply us with products, we could be unable to offer our customers the products they wish to buy and could lose their business. Additionally, manufacturers are required to remain in compliance with certain wage, labor and environment-related laws, regulations and policies. Delayed compliance or failure to comply with such laws, regulations and policies by our vendors could adversely affect our ability to obtain products generally or at favorable costs, affecting our overall ability to maintain and manage inventory levels.

The manufacture of our products and our distributing operations are subject to the risks of doing business abroad, including in China, which could affect our ability to obtain products from foreign suppliers or control the costs of our products.

Although we have taken action to diversify our sourcing base outside of China, the possibility of adverse changes in trade or political relations with China, political instability, increases in labor costs, the occurrence of prolonged adverse weather conditions or a natural disaster such as an earthquake or typhoon, or the continuation of the COVID-19 pandemic or the outbreak of another pandemic disease in China could severely interfere with the manufacturing and/or shipment of our products and would have a material adverse effect on our operations. Our business operations may be adversely affected by the current and future political environment in China. Our ability to source products from China may be adversely affected by changes in Chinese laws and regulations (or the interpretation thereof), including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters. Under its current leadership, China’s Communist Party has been pursuing economic reform policies; however, there is no assurance that China’s government will continue to pursue these policies, or that it will not significantly alter these policies without notice. Policy changes could adversely affect our interests through, among other factors: changes in laws and regulations, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. In addition, electrical shortages, labor shortages or work stoppages may extend the production time necessary to produce our orders. There may be circumstances in the future where we may have to incur higher freight charges to expedite the delivery of product to our customers which could negatively affect our gross profit if we are unable to pass on those charges to our customers.

22


 

Legal, Regulatory, Global and Other External Risks

The impact of climate change, extreme weather, infectious disease outbreaks such as COVID-19, and other unexpected events could result in an interruption to our business, as well as to the operations of our third-party partners, and have a material adverse impact on our business.

The operations of our retail stores, corporate offices, distribution centers, digital operations and supply chain, as well as the operations of our third-party partners, including vendors and manufacturers, are vulnerable to disruption from climate change, natural disasters, infectious disease outbreaks and other unexpected events, such as COVID-19. In addition to impacts on global operations, these events could result in the potential loss of customers and revenues due to mandatory or voluntary store closures, delay or cancellation of merchandise deliveries, reduced consumer confidence or changes in consumers’ discretionary spending habits.

These events could reduce the availability or quality of the materials used to manufacture our merchandise, which could cause delays in responding to consumer demand resulting in the potential loss of customers and revenues or we may incur increased costs to meet demand and may not be able to pass all or a portion of higher costs on to our customers, which could adversely affect our gross margin and results of our operations.

In addition, historically, our operations have been seasonal, and extreme weather conditions, including natural disasters, unseasonable weather or changes in weather patterns, may diminish demand for our seasonal merchandise and could also influence consumer preferences and fashion trends, consumer traffic and shopping habits. In addition, we may incur costs that exceed our applicable insurance coverage for any necessary repairs to property damage or business disruption resulting from climate or weather conditions.

Establishing and protecting our intellectual property is critical to our business.

Our ability to remain competitive is dependent upon our continued ability to secure and protect trademarks, patents and other intellectual property rights in the U.S. and internationally for all of our businesses. We rely on a combination of trade secret, patent, trademark, copyright and other laws, license agreements and other contractual provisions and technical measures to protect our intellectual property rights; however, some countries do not protect intellectual property rights to the same extent as the U.S.

Our business could be significantly harmed if we are not able to protect our intellectual property, or if a court found us to be infringing on others’ intellectual property rights. Any future intellectual property lawsuits or threatened lawsuits in which we are involved, either as a plaintiff or as a defendant, could cost us a significant amount of time and money and distract management’s attention from operating our business. If we do not prevail on any intellectual property claims, then we may have to change our manufacturing processes, products or trade names, any of which could reduce our profitability.

Our business and results of operations are subject to a broad range of uncertainties arising out of world and domestic events.

Our business and results of operations may experience a material adverse impact due to uncertainties arising out of world and domestic events, which may impact not only consumer demand, but also our ability to obtain the products we sell, most of which are produced outside the countries in which we operate. These uncertainties may include a global economic slowdown, inflation, changes in consumer spending or travel, increase in fuel prices, the economic consequences of pandemics such as the ongoing COVID-19 pandemic, natural disasters, wars or other military action or terrorist activities and increased regulatory and compliance burdens related to governmental actions in response to a variety of factors, including but not limited to national security and anti-terrorism concerns and concerns about climate change.

23


 

The scope of our non-U.S. operations exposes our performance to risks including foreign, political, legal and economic conditions and exchange rate fluctuations.

Our performance depends in part on general economic conditions affecting all countries in which we do business, including the impact of Brexit. Although the U.K. and the European Union (“E.U.”) entered into the E.U.-U.K. Trade and Cooperation Agreement on December 30, 2020, uncertainty remains about the impact on our business in the U.K. and the ROI, including impact on tariffs, shipping costs, consumer demand and currency fluctuations.

In addition, across all of our markets, we could be adversely impacted by changes in trade policies, labor, tax or other laws and regulations, intellectual property rights and supply chain logistics. We are also dependent on foreign manufacturers for the products we sell, and our inventory is subject to cost and availability of foreign materials and labor. In addition to the other risks disclosed herein, demand for our product offering in our non-U.S. operations is also subject to local market conditions.

As we expand our international operations, we also increase our exposure to exchange rate fluctuations. Sales from stores outside the U.S. are denominated in the currency of the country in which these operations or stores are located and changes in foreign exchange rates affect the translation of the sales and earnings of these businesses into U.S. dollars for financial reporting purposes. Additionally, inventory purchase agreements may also be denominated in the currency of the country where the vendor resides.

If the U.S. dollar strengthens relative to foreign currencies, our revenues and profits are reduced when converted into U.S. dollars and our margins may be negatively impacted by the increase in product costs. Although we typically have sought to mitigate the negative impacts of foreign currency exchange rate fluctuations through price increases and further actions to reduce costs, we may not be able to fully offset the impact, if at all.

The imposition of tariffs on our products could adversely affect our business.

Tax and trade policies, tariffs and regulations affecting trade between the United States and other countries could have a material adverse effect on our business, results of operations and liquidity. We source a significant portion of our merchandise from manufacturers located outside the U.S., including from China. Existing and potential future tariffs on certain imported products could result in an increase in prices for those products. In addition, tariffs could also increase the costs of our U.S. suppliers, causing those suppliers to also increase the costs of their products. If we are unable to pass along increased costs to our customers, our gross margins could be adversely affected. Alternatively, tariffs may cause us to shift production to other countries, resulting in significant costs and disruption to our business. In addition, further imposition of tariffs by the United States or other countries could have a significant adverse effect on world trade and the world economy.

Our ability to source our merchandise profitably or at all could be hurt if new trade restrictions are imposed, existing trade restrictions become more burdensome or disruptions occur at our suppliers or at the ports.

Trade restrictions, including increased tariffs, safeguards or quotas, on footwear, apparel and accessories could increase the cost or reduce the supply of merchandise available to us. We source footwear and accessory products from foreign manufacturers located in Brazil, Canada, China, Hong Kong, India, Italy, Mexico, Pakistan, Portugal, Peru, Spain, Turkey and Vietnam. Our retail operations, excluding Johnston & Murphy, sell primarily branded products from third parties who source primarily overseas. The investments we are making to develop our sourcing capabilities may not be successful and may, in turn, have an adverse impact on our financial position and results of operations.

There are quotas and trade restrictions on certain categories of goods and apparel from China and countries that are not subject to the World Trade Organization Agreement, which could have a significant impact on our sourcing patterns in the future. In addition, political uncertainty in the United States may result in significant changes to U.S. trade policies, treaties and tariffs, including trade policies and tariffs regarding China. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly

24


 

reduce global trade. Any of these factors could depress economic activity, restrict our sourcing from suppliers and have a material adverse effect on our business, financial condition and results of operations. We cannot predict whether any of the countries in which our merchandise is currently or may be manufactured in the future will be subject to additional trade restrictions imposed by the U.S. and foreign governments, nor can we predict the likelihood, type or effect of any such restrictions. Trade restrictions, including increased tariffs or quotas, embargoes, safeguards and customs restrictions against items we source from foreign manufacturers could increase the cost, delay shipping or reduce the supply of products available to us or may require us to modify our current business practices, any of which could hurt our profitability.

We rely on our suppliers to manufacture and ship the products they produce for us in a timely manner. We also rely on the free flow of goods through open and operational ports worldwide. Labor disputes and other disruptions at various ports or at our suppliers could increase costs for us and delay our receipt of merchandise, particularly if these disputes result in work slowdowns, lockouts, strikes or other disruptions.

We are subject to regulatory proceedings and litigation and to regulatory changes that could have an adverse effect on our financial condition and results of operations.

We are party to certain lawsuits, governmental investigations, and regulatory proceedings, including the proceedings arising out of alleged environmental contamination relating to historical operations of the Company and various suits involving current operations as disclosed in Item 3, "Legal Proceedings" and Note 16 to the Consolidated Financial Statements. If these or similar matters are resolved against us, our results of operations, our cash flows, or our financial condition could be adversely affected. The costs of defending such lawsuits and responding to such investigations and regulatory proceedings may be substantial and their potential to distract management from day-to-day business is significant. Moreover, with retail operations in the United States, Puerto Rico, Canada, the U.K., and the ROI, we are subject to federal, state, provincial, territorial, local and foreign regulations, which impose costs and risks on our business. Numerous states and municipalities as well as the federal government of the U.S. are proposing or have implemented changes to minimum wage, overtime, employee leave, employee benefit requirements and other requirements that will increase costs. Changes in regulations could make compliance more difficult and costly, and failure to comply with these requirements, including even a seemingly minor infraction, could result in liability for damages or penalties.

Actions of activist shareholders have caused, and could continue to cause, us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business.

Our shareholders may from time to time engage in proxy solicitations, advance shareholders proposals or otherwise attempt to affect changes or acquire control over the Company. For example, on May 24, 2021, a shareholder filed a revised preliminary proxy statement containing proposed opposition to our preliminarily filed proxy statement on May 21, 2021, including a proposal to elect four new directors to our Board of Directors. Activist shareholder activities could adversely affect our business because responding to proxy contests and reacting to other actions by activist shareholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. For example, we have retained, and may in the future, retain the services of various professionals to advise us on activist shareholder matters, including legal, financial and communication advisors, the costs of which may negatively impact our future financial results. In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist shareholders initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, and employees, and cause our stock price to experience periods of volatility or stagnation.

25


 

Financial Risks

Our indebtedness is subject to floating interest rates.

Borrowings under our credit facility bear interest at varying rates and expose us to interest rate risk. If interest rates were to increase, our debt service obligations on the variable rate indebtedness referred to above would increase even if the principal amount borrowed remained the same, and our net income and cash flows will correspondingly decrease. Additionally, in connection with the ICE Benchmark Administration’s announced phase-out of LIBOR, we amended our credit facility to, among other things, replace LIBOR with the Secured Overnight Financing Rate (“SOFR”), the Sterling Overnight Index Average (“SONIA”) and the Euro Interbank Offered Rate (“EURIBOR”). It is unclear, however, whether SOFR, SONIA or EURIBOR will retain market acceptance as a LIBOR replacement tool, and we may need to renegotiate our credit facility if other LIBOR alternatives are established and become more widely adopted.

Changes in our effective income tax rate could adversely affect our net earnings.

A number of factors influence our effective income tax rate, including changes in tax law, tax treaties, interpretation of existing laws, including the Tax Cuts and Jobs Act of 2017 (the "Act"), and our ability to sustain our reporting positions on examination. Changes in any of those factors could change our effective tax rate, which could adversely affect our net earnings and liquidity. In addition, our operations outside of the United States may cause greater volatility in our effective tax rate.

We continue to expect the United States Treasury and the Internal Revenue Service to issue regulations and other guidance that could have a material impact on our effective tax rate in future periods.

26


 

ITEM 1B, UNRESOLVED STAFF COMMENTS

None.

ITEM 2, PROPERTIES

At January 29, 2022, we operated 1,425 retail footwear and accessory stores throughout the United States, Puerto Rico, Canada, the United Kingdom and the ROI. New shopping center store leases in the United States, Puerto Rico and Canada typically have initial terms of approximately 10 years. New store leases in the U.K. and the ROI typically have initial terms of between 10 and 15 years. We have leases with fixed base rental payments, rental payments based on a percentage of retail sales over contractual amounts and others with predetermined fixed escalations of the minimum rental payments based on a defined consumer price index or percentage.

The general location, use and approximate size of our principal properties are set forth below:

 

Location

Owned/
Leased

Segment

Use

Approximate
Area
Square
Feet

 

 

Lebanon, TN

Owned

Journeys Group

Distribution warehouse and administrative offices

 

563,000

 

 

Nashville, TN

Leased

Various

Corporate headquarters

 

306,455

 

(1)

Bathgate, Scotland

Owned

Schuh Group

Distribution warehouse

 

244,644

 

 

Chapel Hill, TN

Owned

Licensed Brands

Distribution warehouse

 

182,000

 

 

Fayetteville, TN

Owned

Johnston & Murphy Group

Distribution warehouse

 

178,500

 

 

Deans Industrial Estate, Livingston, Scotland

Owned

Schuh Group

Distribution warehouse and administrative offices

 

106,813

 

 

Northwest Business Park, Ballycoolin, Dublin

Leased

Schuh Group

Distribution warehouse and administrative offices

 

49,460

 

 

Nashville, TN

Leased

Various

Corporate headquarters

 

282,657

 

(2)

 

(1)
We occupy almost 100% of our current corporate headquarters building. The lease on the Nashville office expires in April 2022.
(2)
We will occupy almost 65% of the new corporate headquarters building with the remainder of the building leased to other tenants.

 

On February 10, 2020, we announced plans for our new corporate headquarters in Nashville, Tennessee. We entered into a lease agreement, which was subsequently amended, for approximately 182,000 square feet of office space which will replace our current corporate headquarters office lease. The term of the lease is 15 years, with two options to extend for an additional period of five years each. We believe that all leases of properties that are material to our operations may be renewed, or that alternative properties are available, on terms not materially less favorable to us than existing leases.

 

The 63,000 square foot distribution warehouse, owned by us in Nashville, Tennessee, was sold in January 2022.

 

From time to time, we are subject to legal and/or administrative proceedings incidental to our business. It is the opinion of management that the outcome of pending legal and/or administrative proceedings will not have a material effect on our financial position and results of operations.

Further information with respect to this item may be found in Note 16 to the Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data," which is incorporated herein by reference.

 

27


 

ITEM 4, MINE SAFETY DISCLOSURES

Not applicable.

ITEM 4A, INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The officers of the Company are generally elected at the first meeting of the Board of Directors following the annual meeting of shareholders and hold office until their successors have been chosen and qualified or until their earlier death, resignation or removal. The name, age and office of each of the Company’s executive officers and certain information relating to the business experience of each are set forth below:

Mimi Eckel Vaughn, 55, Board Chair, President and Chief Executive Officer. Ms. Vaughn joined the Company in September 2003 as vice president of strategy and business development. She was named senior vice president, strategy and business development in October 2006, senior vice president of strategy and shared services in April 2009 and senior vice president - finance and chief financial officer in February 2015. In May 2019, Ms. Vaughn was named senior vice president and chief operating officer and continued to serve as senior vice president - finance and chief financial officer until her replacement was appointed in June 2019. In October 2019, Ms. Vaughn was appointed to become president and a member of the Board of Directors. Ms. Vaughn was appointed chief executive officer of the Company on February 2, 2020. In July 2020, Ms. Vaughn was appointed Board chair of the Company. Prior to joining the Company, Ms. Vaughn was executive vice president of business development and marketing, and acting chief financial officer from 2000 to 2001, for Link2Gov Corporation in Nashville. From 1993 to 1999, she was a consultant at McKinsey and Company in Atlanta.

Parag D. Desai, 47, Chief Strategy and Digital Officer. Mr. Desai joined the Company in 2014 as senior vice president of strategy and shared services. He was named chief strategy and digital officer in May 2021. Prior to joining the Company, Mr. Desai spent 14 years with McKinsey and Company, including seven years as a partner. Previously, Mr. Desai also held business development and technology positions at Outpace Systems and Booz Allen & Hamilton.

Thomas Allen George, 66, Senior Vice President – Finance and Chief Financial Officer. Mr. George joined the Company in December 2020 as interim senior vice president of finance and chief financial officer. He was named as permanent senior vice-president - finance and chief financial officer in October 2021. Mr. George has 40 years of experience, including 30 years as chief financial officer of public and private companies. Prior to joining Genesco, he was chief financial officer of Deckers Outdoor Corporation d/b/a Deckers Brands, a global footwear company, for nine years and prior to that was chief financial officer of Oakley, a global eyewear brand. He has served in this same capacity at companies in the technology and medical device industries.

Scott E. Becker, 54, Senior Vice President - General Counsel and Corporate Secretary. In October 2019, Mr. Becker joined the Company as senior vice president, general counsel, and corporate secretary. Prior to joining the Company, Mr. Becker served in a variety of roles with increasing responsibility for Nissan Group of North America and Latin America since 2006. Since 2009, he was a senior vice president with responsibilities for Nissan’s legal, government affairs, finance, strategy and administration. From 2006 to 2009, he served as Nissan’s general counsel, corporate secretary and vice president, legal and government affairs. Prior to joining Nissan, Mr. Becker served in various legal roles at Sears Holdings Corporation. Mr. Becker began his legal career with several Chicago area law firms.

Daniel E. Ewoldsen, 52, Senior Vice President. Mr. Ewoldsen is an 18-year Johnston & Murphy veteran. He joined Johnston & Murphy in 2003 as vice president store operations and was later promoted to vice president store and consumer sales in 2006. He was named executive vice president, Johnston & Murphy Retail and E-Commerce in 2013, president of Johnston & Murphy Group in February 2018 and named senior vice president of Genesco in July 2019. Prior to joining Genesco, Mr. Ewoldsen was with Wilsons Leather from 1996 to 2002 serving in roles with increasing responsibilities, including vice president of stores for the El Portal division.

28


 

Mario Gallione, 61, Senior Vice President. Mr. Gallione is a 44-year veteran of Genesco. He began his career as a Jarman sales associate in 1977. He was promoted to manager and served in a variety of sales management positions until 1987 when he was promoted as a merchandiser trainee and rose through the ranks to divisional merchandise manager for Journeys in 1994 and vice president in 1998. In October 2006, he was named senior vice president, general merchandise manager of Journeys Group. In 2010, he was named chief merchandising officer of Journeys Group. In September 2017, Mr. Gallione was named president of Journeys and in July 2019, he was named senior vice president of Genesco.

Brently G. Baxter, 56, Vice President and Chief Accounting Officer. Mr. Baxter joined the Company in September 2019 as vice president and chief accounting officer. Mr. Baxter most recently served as group vice president, controller and principal accounting officer for Sally Beauty Holdings, Inc., a position he held since 2017. From 2014 and 2016, he served as senior vice president, controller and chief accounting officer for Stein Mart, Inc. From 2006 to 2014, he served as vice president, accounting, treasury and corporate controller for PetSmart, Inc. From 2003 to 2006, Mr. Baxter served as vice president and controller for Cracker Barrel Old Country Store, Inc.

Matthew N. Johnson, 57, Vice President and Treasurer. Mr. Johnson joined the Company in 1993 as manager, corporate finance and was elected assistant treasurer in December 1993. He was elected treasurer in June 1996. He was named vice president finance in October 2006 and renamed treasurer in April 2011 after a period of service as chief financial officer of one of the Company's divisions. Prior to joining the Company, Mr. Johnson was a vice president in the corporate and institutional banking division of The First National Bank of Chicago.

29


 

PART II

ITEM 5, MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our stock is traded on the New York Stock Exchange under the symbol "GCO".

There were approximately 1,425 common shareholders of record on March 11, 2022.

We have not paid cash dividends to our holders of our Common Stock since 1973 and we do not currently anticipate paying cash dividends in the foreseeable future. Our ability to pay cash dividends to our holders of common stock is subject to various restrictions. See Note 11 to the Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" for information regarding restrictions on dividends and redemption of capital stock.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period

(a) Total
Number of
Shares
Purchased

 

(b) Average
Price
Paid
per Share

 

(c) Total
Number of
Shares
Purchased
as Part
of Publicly
Announced
Plans or
Programs

 

(d) Maximum
Number
(or Approximate
Dollar Value)
of Shares that
May Yet Be
Purchased
Under the
Plans or
Programs

 

November 2021

 

 

 

 

 

 

 

 

10-31-21 to 11-27-21

 

 

$

 

 

 

$

59,046

 

 

 

 

 

 

 

 

 

 

December 2021

 

 

 

 

 

 

 

 

11-28-21 to 12-25-21(1)

 

234,345

 

$

61.77

 

 

234,345

 

$

44,571

 

 

 

 

 

 

 

 

 

 

January 2022

 

 

 

 

 

 

 

 

12-26-21 to 1-29-22(1)

 

604,871

 

$

62.40

 

 

604,871

 

$

6,826

 

 

 

 

 

 

 

 

 

 

Total

 

839,216

 

$

62.22

 

 

839,216

 

$

6,826

 

 

 

 

 

 

 

 

 

 

(1) Share repurchases were made pursuant to a $100.0 million share repurchase program approved by the Board of Directors and announced in September 2019. We expect to implement the balance of the repurchase program through purchases made from time to time either in the open market or through private transactions, in accordance with the regulations of the SEC and other applicable legal requirements. In February 2022, we announced a $100.0 million increase to the existing $100.0 million share repurchase authorization.

 

Equity Compensation Plan Information

Refer to Part III, Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" included elsewhere in this report.

ITEM 6, RESERVED

30


 

ITEM 7, MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this Annual Report on Form 10-K, and with Part II, Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) of our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, filed with the SEC on March 31, 2021, which provides a discussion of our financial condition and results of operations for Fiscal 2021 compared to our Fiscal 2020.

Summary of Results of Operations

Our net sales increased 35.6% during Fiscal 2022 compared to Fiscal 2021. The sales increase was driven by increased store sales resulting from the reopening of stores that were closed in Fiscal 2021 due to the COVID-19 pandemic and increased wholesale sales, partially offset by a 2% decrease in digital comparable sales. Stores were open about 96% of possible days in Fiscal 2022 compared to 76% of possible days in Fiscal 2021. We have not disclosed comparable sales for Fiscal 2022 or Fiscal 2021 as we believe that overall sales are a more meaningful metric during these periods due to the impact of the COVID-19 pandemic. See below, under the heading "Comparable Sales", for our definition of comparable sales.

Journeys Group sales increased 28%, Schuh Group sales increased 38%, Johnston & Murphy Group sales increased 65% and Licensed Brands sales increased 70% during Fiscal 2022 compared to Fiscal 2021. Gross margin increased as a percentage of net sales from 45.0% in Fiscal 2021 to 48.8% in Fiscal 2022, reflecting gross margin increases as a percentage of net sales in all of our operating business units. The gross margin increase is primarily due to more full-price selling at Journeys Group, Schuh Group and Johnston & Murphy retail, decreased inventory reserves at Johnston & Murphy Group and lower shipping and warehouse expense in all of our retail divisions. The lower shipping and warehouse expense is a result of reduced e-commerce penetration in Fiscal 2022 as a larger percentage of retail stores were open in Fiscal 2022 compared to Fiscal 2021.

Selling and administrative expenses decreased as a percentage of net sales from 45.6% in Fiscal 2021 to 42.7% in Fiscal 2022, reflecting decreased expenses as a percentage of net sales in all of our operating business units. The decrease as a percentage of net sales in expenses in Fiscal 2022 was primarily due to greater leverage of fixed expenses as a result of the significant increase in revenue and to reduced occupancy expense as a percentage of sales, partially offset by increased performance-based compensation. In Fiscal 2021, we did not record any performance-based compensation expense. The reduction in occupancy expense as a percentage of sales is driven in part by benefits from our ongoing lease initiative and was partially offset by increased percentage rent as a result of increased sales.

Operating margin increased as a percentage of net sales from (6.0)% in Fiscal 2021 to 6.4% in Fiscal 2022, reflecting increased operating income in all of our operating business units.

Significant Developments

 

COVID-19

 

In March 2020, the World Health Organization categorized the outbreak of COVID-19 as a pandemic. As a result, and in consideration of the health and well-being of our employees, customers and communities, and in support of efforts to contain the spread of the virus, we have taken several precautionary measures and adjusted our operational needs, including:

•On March 18, 2020, we temporarily closed our North American retail stores.

31


 

On March 19, 2020, we borrowed $150.0 million under our Credit Facility as a precautionary measure to ensure funds were available to meet our obligations for a substantial period of time in response to the COVID-19 pandemic that caused public health officials to recommend precautions that would mitigate the spread of the virus, including “stay-at-home” orders and similar mandates and warning the public against congregating in heavily populated areas such as malls and shopping centers. We paid down the $150.0 million on September 10, 2020.

•On March 19, 2020, Schuh entered into an Amendment and Restatement Agreement (the “U.K. A&R Agreement”) with Lloyds Bank which amended and restated the Amendment and Restatement Agreement dated April 26, 2017. The U.K. A&R Agreement included only a Facility C revolving credit agreement of £19.0 million, bore interest at LIBOR plus 2.2% per annum and expired in September 2020. In March 2020, we borrowed £19.0 million as a precautionary measure in response to the COVID-19 pandemic. The U.K. A&R Agreement was replaced with the Facility Letter in October 2020 described below and the outstanding borrowings in the amount of £19.0 million were repaid.

•On March 23, 2020, we temporarily closed our stores in the U.K. and the ROI.

•On March 26, 2020, we temporarily closed our U.K. e-commerce business. Effective April 3, 2020, our U.K.-based Schuh business announced that it had reopened its e-commerce operations in compliance with government health and safety practices.

On March 27, 2020, we announced that we were adjusting our operational needs, including a significant reduction of expenses, capital and planned inventory receipts. As part of these measures, we made the decision to temporarily reduce compensation for the executive team and select employees and reduced the cash compensation for our Board of Directors. In addition, we furloughed all of our full-time store employees in North America and our store and distribution center employees in the U.K. We also furloughed employees and reduced headcount in our corporate offices, call centers and distribution centers. In the aggregate, these actions resulted in a temporary reduction of our workforce by 90%.

•During a portion of the first and second quarters of Fiscal 2021, we extended payment terms with suppliers, managed inventory by reducing future receipts and reduced planned capital expenditures by over 50%. For new receipts as of August 1, 2020, we have restored contractual payment terms with suppliers.

•On June 5, 2020, we entered into a Second Amendment to our Credit Facility to, among other things, increase the Total Commitments (as defined in the Credit Agreement) for the revolving loans from $275.0 million to $332.5 million, establish a First-in, Last-out (“FILO”) tranche of indebtedness of $17.5 million, for $350.0 million of total capacity. On June 7, 2021, we paid off the $17.5 million FILO loan.

•On June 25, 2020, our Board of Directors considered the Company’s financial results to date and that more than 90% of the Company’s stores were expected to be reopened by June 30, 2020, and decided to restore going forward a portion of the compensation of the executive team and select employees whose compensation had been reduced on March 27, 2020. In addition, the cash compensation of our Board of Directors, which had also been reduced on March 27, 2020, was partially restored.

•In October 2020, our Board of Directors restored going forward the remaining portion of the compensation of the executive team and select employees whose compensation had been reduced on March 27, 2020 as well as the compensation of the Board of Directors.

•On October 9, 2020, Schuh entered into the Facility Letter with Lloyds under the U.K.'s Coronavirus Large Business Interruption Loan Scheme pursuant to which Lloyds made available a revolving credit facility ("RCF") of £19.0 million for the purpose of refinancing Schuh's existing indebtedness with Lloyds. The RCF expires in October 2023 and bears interest at 2.5% over the Bank of England Base Rate. As of January 29, 2022, we have no borrowings under the Facility Letter.

32


 

•During the fourth quarter of Fiscal 2021, another lockdown in the U.K. and the ROI disrupted the Schuh Group business with stores closed for approximately 80% of possible days in the first quarter of Fiscal 2022. All Schuh Group stores had re-opened as of the end of the second quarter of Fiscal 2022.

•During the fourth quarter of Fiscal 2021, a second lockdown in several provinces in Canada disrupted business in some of the Journeys, Little Burgundy and Johnston & Murphy stores. All impacted stores in Canada had re-opened as of the end of the second quarter of Fiscal 2022.

•In December 2020, the Company returned the compensation to select employees other than executive team whose compensation had been reduced on March 27, 2020.

We are operating substantially all retail locations. All store locations are operating under enhanced measures to ensure the health and safety of employees and customers, including providing hand sanitizer in multiple locations throughout each store for customer and employee use, enhanced cleaning and sanitation protocols, reconfigured sales floors to promote physical distancing and modified employee and customer interactions to limit contact. In most of our Journeys, Schuh and Johnston & Murphy stores, it is no longer required for employees to wear masks unless mandated by local government where the store is located.

As a result of the economic and business impact of the COVID-19 pandemic, we revised certain accounting estimates and judgments. Given the ongoing and evolving economic and business impact of the COVID-19 pandemic, we may be required to further revise certain accounting estimates and judgments such as, but not limited to, those related to the valuation of inventory, goodwill, long-lived assets and deferred tax assets, which could have a material adverse effect on our financial position and results of operations.

During Fiscal 2021 and the first half of Fiscal 2022, we withheld certain contractual rent payments generally correlating with time periods when our stores were closed and/or correlating with sales declines from Fiscal 2020. We continue to recognize rent expense in accordance with the contractual terms. We worked with landlords in various markets to seek commercially reasonable lease concessions given the impact of COVID-19. In cases where the agreements did not result in a substantial increase in the rights of the lessor or the obligation of the lessee such that the total cash flows of the modified lease were substantially the same or less than the total cash flows of the existing lease, we did not reevaluate the contract terms. For these lease agreements, we have recognized a reduction in variable rent expense in the period that the concession was granted. During Fiscal 2022 and Fiscal 2021, we have recognized approximately $17 million and $34 million, respectively, in rent savings which are related to abatements and temporary rent relief.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 pandemic and options to defer payroll tax payments. Based on our evaluation of the CARES Act, we qualify for certain employer payroll tax credits as well as the deferral of payroll and other tax payments in the future, which were treated as government subsidies to offset related operating expenses. During Fiscal 2022 and Fiscal 2021, qualified payroll tax credits under the CARES Act and other foreign subsidy programs reduced our selling and administrative expenses by approximately $7.8 million and $13.8 million, respectively, on our Consolidated Statements of Operations.

Savings from a government program in the U.K. have provided property tax relief of approximately $9.7 million and $13.3 million, respectively, for Fiscal 2022 and Fiscal 2021. Other government relief programs in the U.K., the ROI and Canada provided aggregate savings of approximately $5.2 million in Fiscal 2022.

During the second half of Fiscal 2022, supply chain challenges caused increased freight and logistics costs related to inventory purchases from suppliers. We have estimated that these costs increased our cost of sales by approximately $12.7 million on our Consolidated Statements of Operations for Fiscal 2022.

33


 

Asset Impairment and Other Charges

We recorded a pretax gain to earnings of $8.1 million in Fiscal 2022, including an $18.1 million gain on the sale of a distribution warehouse and a $0.6 million insurance gain, partially offset by $8.6 million for professional fees related to the actions of a shareholder activist and $2.0 million for retail store asset impairments which is included in asset impairments and other, net on the Consolidated Statements of Operations for Fiscal 2022.

Key Performance Indicators

In assessing the performance of our business, we consider a variety of performance and financial measures. The key performance indicators we use to evaluate the financial condition and operating performance of our business are comparable sales, net sales, gross margin, operating income (loss) and operating margin. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures presented herein. These measures may not be comparable to similarly-titled performance indicators used by other companies.

Comparable Sales

We consider comparable sales to be an important indicator of our current performance, and investors may find it useful as such. Comparable sales results are important to achieve leveraging of our costs, including occupancy, selling salaries, depreciation, etc. Comparable sales also have a direct impact on our total net revenue, cash and working capital. We define "comparable sales" as sales from stores open longer than one year, beginning with the first day a store has comparable sales (which we refer to in this report as "same store sales"), and sales from websites operated longer than one year and direct mail catalog sales (which we refer to in this report as "comparable direct sales"). Temporarily closed stores are excluded from the comparable sales calculation if closed for more than seven days. Expanded stores are excluded from the comparable sales calculation until the first day an expanded store has comparable prior year sales. Current year foreign exchange rates are applied to both current year and prior year comparable sales to achieve a consistent basis for comparison. We have not disclosed comparable sales for Fiscal 2022 or Fiscal 2021, as we believe that overall sales are a more meaningful metric during these periods due to the impact of the COVID-19 pandemic and related extended store closures.

Results of Operations—Fiscal 2022 Compared to Fiscal 2021

Our net sales for Fiscal 2022 increased 35.6% to $2.4 billion from $1.8 billion in Fiscal 2021. The increase in net sales was driven by increased store sales resulting from the reopening of stores that were closed at times in Fiscal 2021 due to the COVID-19 pandemic and increased wholesale sales, partially offset by a 2% decrease in digital comparable sales. Stores were open about 96% of possible days in Fiscal 2022 compared to 76% of possible days in Fiscal 2021.

Gross margin increased 46.8% to $1.2 billion in Fiscal 2022 from $804.5 million in Fiscal 2021, and increased as a percentage of net sales from 45.0% in Fiscal 2021 to 48.8% in Fiscal 2022, reflecting gross margin increases as a percentage of net sales in all of our operating business units. The gross margin increase is primarily due to more full-price selling at Journeys Group, Schuh Group and Johnston & Murphy retail, decreased inventory reserves at Johnston & Murphy Group and lower shipping and warehouse expense in all of our retail divisions. The lower shipping and warehouse expense is a result of reduced e-commerce penetration in Fiscal 2022 as a larger percentage of retail stores were open in Fiscal 2022 compared to Fiscal 2021.

34


 

Selling and administrative expenses decreased as a percentage of net sales from 45.6% in Fiscal 2021 to 42.7% in Fiscal 2022, reflecting decreased expenses as a percentage of net sales in all of our operating business units. The decrease as a percentage of net sales in expenses in Fiscal 2022 was primarily due to greater leverage of fixed expenses as a result of the significant increase in revenue and to reduced occupancy expense as a percentage of sales, partially offset by increased performance-based compensation. The reduction in occupancy expense as a percentage of sales is driven in part by benefits from our ongoing lease initiative and was partially offset by increased percentage rent as a result of increased sales. Our annual performance-based economic value added (EVA) compensation plan, which is for essentially all corporate and non-store division employees, is designed to be self-funded by improved earnings and capital efficiency on a year-over-year basis. The plan is designed to reward increasing net operating earnings after taxes minus a charge for capital on a year-over-year basis. As a result of the significant improvement in our earnings on a more efficient capital base in Fiscal 2022, we accrued performance-based compensation expense of $54 million in Fiscal 2022, of which $48 million will be paid in the first quarter of Fiscal 2023. The remaining amount, which is subject to a service requirement, is an estimate that is expected to be paid in Fiscal 2024, Fiscal 2025 and Fiscal 2026 and could increase or decrease according to our future performance. We did not accrue performance-based incentive compensation in Fiscal 2021, as we experienced a significant decline in earnings compared to Fiscal 2020 as a result of the COVID-19 pandemic. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.

Earnings from continuing operations before income taxes (“pretax earnings") for Fiscal 2022 were $153.0 million, compared to a pretax loss of $111.7 million for Fiscal 2021. Pretax earnings for Fiscal 2022 included an asset impairment and other gain of $8.1 million which included an $18.1 million gain on the sale of a distribution warehouse and a $0.6 million insurance gain, partially offset by $8.6 million for professional fees related to the actions of a shareholder activist and $2.0 million for retail store asset impairments. The pretax loss for Fiscal 2021 included a goodwill impairment charge of $79.3 million and an asset impairment and other charge of $18.7 million which included $13.8 million for retail store asset impairments and $5.3 million for a trademark impairment, partially offset by a $0.4 million gain for the release of an earnout related to the Togast acquisition.

Net earnings for Fiscal 2022 were $114.9 million, or $7.92 diluted earnings per share compared to a net loss of $56.4 million, or $3.97 diluted loss per share for Fiscal 2021. The effective income tax rate was 24.9% for Fiscal 2022 compared to 49.8% for Fiscal 2021. The effective tax rate for Fiscal 2022 was lower compared to Fiscal 2021 as the one-time tax benefits from initiatives under the CARES Act were partially offset by the non-deductibility of the goodwill impairment charge in Fiscal 2021, did not apply to Fiscal 2022. See Item 8, Note 12, "Income Taxes", to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

During Fiscal 2022, we benefitted from government stimulus which we don’t expect to recur going forward. We expect a more normalized promotional environment in Fiscal 2023, thereby reducing gross margins. We expect lower performance-based compensation expense and higher occupancy expense next year as Fiscal 2022 benefitted from leverage in occupancy expense as a result of the significant increase in revenue as well as rent abatements and government relief in Fiscal 2022 which is not expected to recur going forward in Fiscal 2023. In addition, we expect increased freight and logistics costs with a more normalized supply chain and inventory levels in the back half of Fiscal 2023.

Journeys Group

 

 

 

Fiscal Year Ended

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

Net sales

 

$

1,576,475

 

 

$

1,227,954

 

 

 

28.4

%

Operating income

 

$

165,336

 

 

$

76,896

 

 

 

115.0

%

Operating margin

 

 

10.5

%

 

 

6.3

%

 

 

 

 

35


 

Net sales from Journeys Group increased 28.4% to $1.58 billion for Fiscal 2022 compared to $1.23 billion for Fiscal 2021, primarily due to increased store sales, resulting from the reopening of stores that were closed during Fiscal 2021 due to the COVID-19 pandemic, partially offset by decreased digital comparable sales. The store count for Journeys Group was 1,135 stores at the end of Fiscal 2022, including 229 Journeys Kidz stores, 47 Journeys stores in Canada and 37 Little Burgundy stores in Canada, compared to 1,159 stores at the end of Fiscal 2021, including 233 Journeys Kidz stores, 47 Journeys stores in Canada and 38 Little Burgundy stores in Canada.

Journeys Group operating income for Fiscal 2022 increased 115.0% to $165.3 million, compared to $76.9 million for Fiscal 2021. The increase in operating income was primarily due to (i) increased net sales, (ii) increased gross margin as a percentage of net sales, primarily reflecting decreased markdowns, improved initial margins and decreased shipping and warehouse expenses and (iii) decreased selling and administrative expenses as a percentage of net sales due to greater leverage of fixed expenses as a result of revenue growth, and to decreased occupancy expense as a percentage of sales, partially offset by increased performance-based compensation.

Schuh Group

 

 

 

Fiscal Year Ended

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

Net sales

 

$

423,560

 

 

$

305,941

 

 

 

38.4

%

Operating income (loss)

 

$

19,257

 

 

$

(11,602

)

 

NM

 

Operating margin

 

 

4.5

%

 

 

(3.8

)%

 

 

 

 

Net sales from the Schuh Group increased 38.4% to $423.6 million for Fiscal 2022, compared to $305.9 million for Fiscal 2021, primarily due to increased store sales, resulting from the reopening of stores that were closed during Fiscal 2021 due to the COVID-19 pandemic, the favorable impact of $22.6 million due to changes in foreign exchange rates and increased digital comparable sales. Stores were open almost 80% of possible operating days in Fiscal 2022 compared to 58% of possible operating days in Fiscal 2021. Schuh Group operated 123 stores at the end of Fiscal 2022 and Fiscal 2021.

Schuh Group operating income for Fiscal 2022 was $19.3 million compared to an operating loss of $11.6 million for Fiscal 2021. The increase in earnings this year reflects (i) increased net sales, (ii) increased gross margin as a percentage of net sales, reflecting more full-price selling and decreased shipping and warehouse expense and (iii) decreased selling and administrative expenses as a percentage of net sales, reflecting decreased occupancy expense as a percentage of sales, grant income from the U.K. and ROI governments, and greater leverage of fixed expenses as a result of revenue growth, partially offset by increased performance-based compensation and marketing expenses. In addition, Schuh Group's operating income included a favorable impact of $0.4 million for Fiscal 2022 due to changes in foreign exchange rates.

Johnston & Murphy Group

 

 

 

Fiscal Year Ended

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

Net sales

 

$

252,855

 

 

$

152,941

 

 

 

65.3

%

Operating income (loss)

 

$

7,029

 

 

$

(47,624

)

 

NM

 

Operating margin

 

 

2.8

%

 

 

(31.1

)%

 

 

 

 

Johnston & Murphy Group net sales increased 65.3% to $252.9 million for Fiscal 2022 from $152.9 million for Fiscal 2021 primarily due to increased store sales, resulting from the reopening of stores closed during Fiscal 2021 due to the COVID-19 pandemic, and increased wholesale sales and digital comparable sales. Retail operations accounted for 78.5% of Johnston & Murphy Group's sales in Fiscal 2022, up from 77.6% in Fiscal 2021. The store count for Johnston & Murphy retail operations at

36


 

the end of Fiscal 2022 included 167 Johnston & Murphy shops and factory stores, including eight stores in Canada, compared to 178 Johnston & Murphy shops and factory stores, including eight stores in Canada, at the end of Fiscal 2021.

Johnston & Murphy Group operating income for Fiscal 2022 was $7.0 million compared to an operating loss of $47.6 million in Fiscal 2021. The increase was primarily due to (i) increased net sales, (ii) increased gross margin as a percentage of net sales, reflecting decreased retail markdowns, decreased inventory reserves, decreased shipping and warehouse expense and a higher mix of retail product and (iii) decreased selling and administrative expenses as a percentage of net sales due to greater leverage of fixed expenses as a result of revenue growth, especially occupancy and compensation expenses, partially offset by increased performance-based compensation expense.

Licensed Brands

 

 

 

Fiscal Year Ended

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

Net sales

 

$

169,194

 

 

$

99,694

 

 

 

69.7

%

Operating income (loss)

 

$

6,583

 

 

$

(5,430

)

 

NM

 

Operating margin

 

 

3.9

%

 

 

(5.4

)%

 

 

 

 

Licensed Brands’ net sales increased 69.7% to $169.2 million for Fiscal 2022 from $99.7 million for Fiscal 2021, reflecting primarily the growth of our Levi's footwear business as well as increased sales in our other licensed brands as customers began to recover from the COVID-19 pandemic and order volumes from our wholesale customers improved.

Licensed Brands’ operating income increased from a loss of $5.4 million for Fiscal 2021 to income of $6.6 million for Fiscal 2022. The $12.0 million increase in operating income was primarily due to (i) increased net sales, (ii) increased gross margin as a percentage of net sales as the prior year gross margin was impacted by pre-Togast acquisition royalty and commission cost and (iii) decreased selling and administrative expenses as a percentage of net sales reflecting decreased bad debt expense and shipping and compensation expenses, partially offset by increased royalty and performance-based compensation expense. While gross margin increased for Fiscal 2022, excess freight and logistics costs related to supply chain challenges negatively impacted gross margin.

Corporate, Interest Expenses and Other Charges

Corporate and other expense for Fiscal 2022 was $42.6 million compared to $119.5 million for Fiscal 2021. Corporate expense in Fiscal 2022 included an $18.1 million gain on the sale of a distribution warehouse and a $0.6 million insurance gain, partially offset by $8.6 million for professional fees related to the actions of a shareholder activist and $2.0 million for retail store asset impairments. Corporate expense in Fiscal 2021 included non-cash impairment charges of $79.3 million related to goodwill, $13.8 million related to retail store assets and $5.3 million for trademarks, partially offset by a $0.4 million gain for the release of an earnout related to the Togast acquisition. Corporate and other expense, excluding asset impairment and other charges, increased $29.1 million reflecting increased performance-based compensation expense and rent expense on our new headquarters building. In Fiscal 2021, we did not record any performance-based compensation expense.

Net interest expense decreased to $2.4 million in Fiscal 2022 from $5.1 million in Fiscal 2021 primarily due to decreased average borrowings in Fiscal 2022.

37


 

Liquidity and Capital Resources

Working Capital

Our business is seasonal, with our investment in inventory and accounts receivable normally reaching peaks in the spring and fall of each year. Historically, cash flow from operations has been generated principally in the fourth quarter of each fiscal year.

 

Cash flow changes:

 

Fiscal Year Ended

 

(dollars in millions)

 

January 29, 2022

 

 

January 30, 2021

 

 

Increase
(Decrease)

 

Net cash provided by operating activities

 

$

239.9

 

 

$

157.8

 

 

$

82.1

 

Net cash used in investing activities

 

 

(33.9

)

 

 

(24.0

)

 

 

(9.9

)

Net cash used in financing activities

 

 

(101.2

)

 

 

(3.2

)

 

 

(98.0

)

Effect of foreign exchange rate fluctuations on cash

 

 

0.6

 

 

 

3.1

 

 

 

(2.5

)

Increase in cash and cash equivalents

 

$

105.4

 

 

$

133.7

 

 

$

(28.3

)

 

Reasons for the major variances in cash provided by (used in) the table above are as follows:

Cash provided by operating activities was $82.1 million higher for Fiscal 2022 compared to Fiscal 2021, reflecting primarily the following factors:

A $156.2 million increase in cash flow from changes in prepaids and other current assets, primarily reflecting decreased prepaid income taxes, in part due to the receipt of an income tax refund;
A $58.7 million increase in cash flow from changes in other accrued liabilities, primarily reflecting increased performance-based compensation accruals in Fiscal 2022 compared to payments of Fiscal 2020 performance-based compensation accruals in Fiscal 2021; and
A $28.9 million increase in cash flow from increased earnings in Fiscal 2022, net of intangible impairment in the first quarter of Fiscal 2021 and deferred income taxes; partially offset by
A $65.7 million decrease in cash flow from changes in inventory, reflecting a $10.8 million decrease in inventory in Fiscal 2022 versus Fiscal 2021 compared to a $76.5 million decrease in inventory in Fiscal 2021 versus Fiscal 2020;
A $28.8 million decrease in cash flow from changes in other assets and liabilities, primarily reflecting rent payments made in Fiscal 2022 versus rent payments held in Fiscal 2021; and
A $25.9 million decrease in cash flow from changes in accounts payable reflecting changes in buying patterns.

 

Cash used in investing activities was $9.9 million higher for Fiscal 2022 compared to Fiscal 2021 reflecting increased capital expenditures primarily related to our new headquarters building and digital and omni-channel initiatives, partially offset by the proceeds from the sale of a distribution warehouse.

Cash used in financing activities was $98.0 million higher in Fiscal 2022 as compared to Fiscal 2021 reflecting share repurchases in Fiscal 2022.

Sources of Liquidity and Future Capital Needs

We have three principal sources of liquidity: cash flow from operations, cash and cash equivalents on hand and our credit facilities discussed in Item 8, Note 9, "Long-Term Debt", to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

38


 

On January 28, 2022, we entered into a Third Amendment to our Credit Facility to, among other things, extend the maturity date to January 28, 2027 and remove the first in-last out term loan that was in an amount equal to $17.5 million. The Total Commitments (as defined in the Credit Agreement) for the revolving loans remains at $332.5 million. As of January 29, 2022, we have borrowed $15.7 million under our Credit Facility.

On October 9, 2020, Schuh entered into a Facility Letter with Lloyds under the U.K.'s Coronavirus Large Business Interruption Loan Scheme pursuant to which Lloyds made available a RCF of £19.0 million for the purpose of refinancing Schuh's existing indebtedness with Lloyds. The RCF expires in October 2023. As of January 29, 2022, we have not borrowed under the Schuh Facility Letter.

We were in compliance with all the relevant terms and conditions of the Credit Facility and Facility Letter as of January 29, 2022.

We believe that cash on hand, cash provided by operations and borrowings under our amended Credit Facility and the Schuh Facility Letter will be sufficient to support our liquidity needs in Fiscal 2023 and the foreseeable future.

Our Fiscal 2022 year end cash benefitted from lower inventory levels resulting from supply chain disruptions. During Fiscal 2023, we expect our primary cash requirements to be directed towards funding operating activities, including the acquisition of inventory, and other working capital obligations including those related to taxes, as well as employee compensation, which includes payment of the current portion of the Fiscal 2022 performance-based compensation accrual of approximately $48 million. Given the continued uncertainty and the potential impact on consumer spending from the COVID-19 pandemic and recent geopolitical events, we believe it is prudent to maintain higher than usual cash balances to support potential disruptions in cash flow. While the timing and amount of any common stock repurchases will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions, we will also consider returning cash to our shareholders through opportunistic share repurchases pursuant to our repurchase authorization described in more detail below.

In the fourth quarter of Fiscal 2021, we implemented tax strategies allowed under the 5-year carryback provisions in the CARES Act which we believed would generate approximately $55 million of net tax refunds. During Fiscal 2022, we have received approximately $26 million of such refunds and expect to receive the balance in Fiscal 2023.

 

39


 

Contractual Obligations

The following table sets forth aggregate contractual obligations as of January 29, 2022.

(in thousands)

 

 

 

Contractual Obligations

 

Total

 

 

Current

 

 

Long-Term

 

Long-Term Debt Obligations

 

$

15,679

 

 

$

 

 

$

15,679

 

Operating Lease Obligations(1)

 

 

711,900

 

 

 

169,973

 

 

 

541,927

 

Purchase Obligations(2)

 

 

11,446

 

 

 

11,446

 

 

 

 

Other Long-Term Liabilities

 

 

791

 

 

 

172

 

 

 

619

 

Total Contractual Obligations

 

$

739,816

 

 

$

181,591

 

 

$

558,225

 

(1) Operating lease obligations excludes $10.9 million for leases signed but not yet commenced.

(2) As a result of the Togast acquisition, we also have a commitment to Samsung C&T America, Inc. (“Samsung”) related to the ultimate sale and valuation of related inventories owned by Samsung. If the product is sold below Samsung’s cost, we are committed to Samsung for the difference between the sales price and its cost.

 

We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase that are cancelable by their terms. We do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation.

Capital Expenditures

Capital expenditures were $53.9 million and $24.1 million for Fiscal 2022 and 2021, respectively. The $29.8 million increase in Fiscal 2022 capital expenditures as compared to Fiscal 2021 is primarily related to the Company's new headquarters building and digital and omni-channel initiatives.

We expect total capital expenditures for Fiscal 2023 to be approximately $55 million of which approximately 55% is for new stores and renovations and 45% is for computer hardware, software and warehouse enhancements for initiatives to drive traffic and omni-channel initiatives and other. Planned capital expenditures excludes approximately $11 million for our new corporate headquarters building. We do not currently have any longer term capital expenditures or other cash requirements other than as set forth in the contractual obligations table. We also do not currently have any off-balance sheet arrangements.

Common Stock Repurchases

We repurchased 1,360,909 shares during Fiscal 2022 at a cost of $82.8 million or an average of $60.88 per share. As of January 29, 2022, we accrued $4.8 million for share repurchases that will settle in Fiscal 2023 which is included in other accrued liabilities on the Consolidated Balance Sheets. We were operating under a $100.0 million repurchase authorization from September 2019. In February 2022, we announced a $100.0 million increase to the existing $100.0 million share repurchase authorization. As of March 23, 2022, we have $100.3 million remaining under the expanded share repurchase authorization. We did not repurchase any shares in Fiscal 2021. We repurchased 4,570,015 shares during Fiscal 2020 at a cost of $189.4 million or an average of $41.44 per share.

Environmental and Other Contingencies

We are subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Item 8, Note 16, "Legal Proceedings", to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

40


 

Financial Market Risk

The following discusses our exposure to financial market risk.

Outstanding Debt – We have $15.7 million (£11.7 million) of outstanding U.S. revolver borrowings at a weighted average interest rate of 1.48% as of January 29, 2022. A 100 basis point increase in interest rates would increase annual interest expense by $0.2 million on the $15.7 million revolver borrowings.

Cash and Cash Equivalents – Our cash and cash equivalent balances are held in our bank accounts and not invested at this time. We did not have significant exposure to changing interest rates on invested cash at January 29, 2022. As a result, we consider the interest rate risk implicit in these investments at January 29, 2022 to be low.

Summary – Based on our overall market interest rate exposure at January 29, 2022, we believe that the effect, if any, of reasonably possible near-term changes in interest rates on our consolidated financial position, results of operations or cash flows for Fiscal 2023 would not be material.

Accounts Receivable – Our accounts receivable balance at January 29, 2022 is concentrated in our wholesale businesses, which sell primarily to department stores and independent retailers across the United States. In the wholesale businesses, one customer accounted for 38%, one customer accounted for 13% and one customer accounted for 7% of our total trade receivables balance, while no other customer accounted for more than 6% of our total trade receivables balance as of January 29, 2022. We monitor the credit quality of our customers and establish an allowance for doubtful accounts based upon factors surrounding credit risk of specific customers, historical trends and other information, as well as customer specific factors; however, credit risk is affected by conditions or occurrences within the economy and the retail industry, as well as company-specific information.

Foreign Currency Exchange Risk – We are exposed to translation risk because certain of our foreign operations utilize the local currency as their functional currency and those financial results must be translated into United States dollars. As currency exchange rates fluctuate, translation of our financial statements of foreign businesses into United States dollars affects the comparability of financial results between years. Schuh Group's net sales and operating income for Fiscal 2022 were positively impacted by $22.6 million and $0.4 million, respectively, due to the change in foreign exchange rates.

New Accounting Principles

Descriptions of recently issued accounting pronouncements, if any, and the accounting pronouncements adopted by us during Fiscal 2022 are included in Note 2, "New Accounting Pronouncements", to the Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data".

Critical Accounting Estimates

As a result of the continuing economic and business impact of COVID-19, we may be required to revise certain accounting estimates and judgments such as, but not limited to, those related to the valuation of inventory, goodwill, long-lived assets and deferred tax assets, which could have a material adverse effect on our financial position and results of operations.

Inventory Valuation

In our footwear wholesale operations and our Schuh Group segment, cost for inventory that we own is determined using the first-in, first-out ("FIFO") method. Net realizable value is determined using a system of analysis which evaluates inventory at the stock number level based on factors such as inventory turn, average selling price, inventory level, and selling prices reflected in future orders for footwear wholesale. We provide a valuation allowance when the inventory has not been marked down to net realizable value based on current selling prices or when the inventory is not turning and is not expected to turn at satisfactory levels.

41


 

In our retail operations, other than the Schuh Group segment, we employ the retail inventory method, applying average cost-to-retail ratios to the retail value of inventories. Under the retail inventory method, valuing inventory at the lower of cost or market is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories.

Inherent in the retail inventory method are subjective judgments and estimates, including merchandise mark-on, markups, markdowns and shrinkage. These judgments and estimates, coupled with the fact that the retail inventory method is an averaging process, could produce a range of cost figures. To reduce the risk of inaccuracy and to ensure consistent presentation, we employ the retail inventory method in multiple subclasses of inventory with similar gross margins, and analyze markdown requirements at the stock number level based on factors such as inventory turn, average selling price and inventory age. In addition, we accrue markdowns as necessary. These additional markdown accruals reflect all of the above factors as well as current agreements to return products to vendors and vendor agreements to provide markdown support. In addition to markdown allowances, we maintain reserves for shrinkage and damaged goods based on historical rates.

Inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market conditions, fashion trends and overall economic conditions. Failure to make appropriate conclusions regarding these factors may result in an overstatement or understatement of inventory value. A change of 10% from the recorded amounts for markdowns, shrinkage and damaged goods would have changed inventory by $0.4 million at January 29, 2022.

Impairment of Long-Lived Assets

We periodically assess the realizability of our long-lived assets, other than goodwill, and evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount. Inherent in the analysis of impairment are subjective judgments about future cash flows. Failure to make appropriate conclusions regarding these judgments may result in an overstatement or understatement of the value of long-lived assets.

We annually assess our goodwill and indefinite lived trademarks for impairment and on an interim basis if indicators of impairment are present. Our annual assessment date of goodwill and indefinite lived trade names is the first day of the fourth quarter.

In accordance with ASC 350, we have the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill is impaired. If, after such assessment, we conclude that the asset is not impaired, no further action is required. However, if we conclude otherwise, we are required to determine the fair value of the asset using a quantitative impairment test. The quantitative impairment test for goodwill compares the fair value of each reporting unit with the carrying value of the reporting unit with which the goodwill is associated. If the fair value of the reporting unit is less than the carrying value of the reporting unit, an impairment charge would be recorded for the amount, if any, in which the carrying value exceeds the reporting unit's fair value. We estimate fair value using the best information available, and compute the fair value derived by a combination of the market and income approach. The market approach is based on observed market data of comparable companies to determine fair value. The income approach utilizes a projection of a reporting unit’s estimated operating results and cash flows that are discounted using a weighted-average cost of capital that reflects current market conditions. A key assumption in our fair value estimate is the weighted average cost of capital utilized for discounting our cash flow projections in our income approach. The projection uses our best estimates of economic and market conditions over the projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. For additional information regarding impairment of long-lived assets, see Item 8, Note 4, "Goodwill and Other Intangible Assets" and Note 5,"Asset Impairments and Other Charges" to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

42


 

The quantitative impairment test for indefinite lived trademarks compares the fair value of the trademark with the carrying value of the related trademark. If the fair value of the trademark is less than the carrying value of the trademark, an impairment charge would be recorded for the amount, if any, in which the carrying value exceeds the trademark’s fair value. We estimate fair value using the best information available, and compute the fair value using an income approach that estimates the savings that the trademark owner would realize from owning that asset instead of having to pay rent or a royalty for the use of it. Key assumptions in our fair value estimate are the selected royalty rate and discount rate. Other significant estimates and assumptions include terminal value growth rates and future profitability expectations.

Revenue Recognition

In accordance with ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"), revenue shall be recognized upon satisfaction of all contractual performance obligations and transfer of control to the customer. Revenue is measured as the amount of consideration we expect to be entitled to in exchange for corresponding goods. The majority of our sales are single performance obligation arrangements for retail sale transactions for which the transaction price is equivalent to the stated price of the product, net of any stated discounts applicable at a point in time. Each sales transaction results in an implicit contract with the customer to deliver a product at the point of sale. Revenue from retail sales is recognized at the point of sale, is net of estimated returns, and excludes sales and value added taxes. Revenue from catalog and internet sales is recognized at estimated time of delivery to the customer, is net of estimated returns, and excludes sales and value added taxes. Wholesale revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the related goods have been shipped and legal title has passed to the customer. Actual amounts of markdowns have not differed materially from estimates. Shipping and handling costs charged to customers are included in net sales. We elected the practical expedient within ASC 606 related to taxes that are assessed by a governmental authority, which allows for the exclusion of sales and value added tax from transaction price.

A provision for estimated returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. Estimated returns are based on historical returns and claims. Actual returns and claims in any future period may differ from historical experience. Revenue from gift cards is deferred and recognized upon the redemption of the cards. These cards have no expiration date. Income from unredeemed cards is recognized in our Consolidated Statements of Operations within net sales in proportion to the pattern of rights exercised by the customer in future periods. We perform an evaluation of historical redemption patterns from the date of original issuance to estimate future period redemption activity.

Income Taxes

As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our income taxes in each of the tax jurisdictions in which we operate. This process involves estimating actual current tax obligations together with assessing temporary differences resulting from differing treatment of certain items for tax and accounting purposes, such as depreciation of property and equipment and valuation of inventories. These temporary differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income. Actual results could differ from this assessment if adequate taxable income is not generated in future periods. To the extent it is more likely than not that some portion or all of a deferred asset will not be realized, valuation allowances are established. To the extent valuation allowances are established or increased in a period, we include an expense within the tax provision in our Consolidated Statements of Operations. These deferred tax valuation allowances may be released in future years when we consider that it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, we will need to periodically evaluate whether or not all available evidence, such as future taxable income and reversal of temporary differences, tax planning strategies, and recent results of operations, provides sufficient positive evidence to offset any other negative evidence that may exist at such time. In the event the deferred tax valuation allowance is released, we would record an income tax benefit for a portion or all of the deferred tax valuation allowance released. At January 29, 2022, we had a deferred tax valuation allowance of $42.2 million.

43


 

Income tax reserves for uncertain tax positions are determined using the methodology required by the Income Tax Topic of the Accounting Standards Codification (“Codification”). This methodology requires companies to assess each income tax position taken using a two-step process. A determination is first made as to whether it is more likely than not that the position will be sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the respective tax position. Uncertain tax positions require determinations and estimated liabilities to be made based on provisions of the tax law which may be subject to change or varying interpretation. If our determinations and estimates prove to be inaccurate, the resulting adjustments could be material to our future financial results. See Item 8, Note 12, "Income Taxes", to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to income taxes.

Leases

We recognize lease assets and corresponding lease liabilities for all operating leases on the Consolidated Balance Sheets as described under ASU No. 2016-02, “Leases (Topic 842).” We evaluate renewal options and break options at lease inception and on an ongoing basis, and include renewal options and break options that we are reasonably certain to exercise in our expected lease terms for calculations of the right-of-use assets and liabilities. Approximately 2% of our leases contain renewal options. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term. As most of our leases do not provide a determinable implicit rate, we estimate our collateralized incremental borrowing rate based upon a synthetic credit rating and yield curve analysis at the lease commencement or modification date in determining the present value of lease payments. For lease payments in foreign currencies, the incremental borrowing rate is adjusted to be reflective of the risk associated with the respective currency. See Item 8, Note 10, "Leases", to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to leases.

ITEM 7A, QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We incorporate by reference the information regarding market risk appearing under the heading “Financial Market Risk” in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations."

 

44


 

ITEM 8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

INDEX TO FINANCIAL STATEMENTS

 

 

Page

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

46

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID: 42)

47

Consolidated Balance Sheets, January 29, 2022 and January 30, 2021

49

Consolidated Statements of Operations, each of the three fiscal years ended 2022, 2021 and 2020

50

Consolidated Statements of Comprehensive Income, each of the three fiscal years ended 2022, 2021 and 2020

51

Consolidated Statements of Cash Flows, each of the three fiscal years ended 2022, 2021 and 2020

52

Consolidated Statements of Equity, each of the three fiscal years ended 2022, 2021 and 2020

53

Notes to Consolidated Financial Statements

54

 

45


 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and the Board of Directors of Genesco Inc.

 

Opinion on Internal Control over Financial Reporting

We have audited Genesco Inc. and Subsidiaries’ internal control over financial reporting as of January 29, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Genesco Inc. and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 29, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Genesco Inc. and Subsidiaries as of January 29, 2022 and January 30, 2021, the related consolidated statements of operations, comprehensive income, cash flows, and equity for each of the three fiscal years in the period ended January 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15, and our report dated March 23, 2022 expressed an unqualified opinion thereon.

 

Basis for Opinion

 

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

 

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 

Definition and Limitations of Internal Control over Financial Reporting

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Nashville, Tennessee

March 23, 2022

46


 

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Genesco Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Genesco Inc. (the Company) as of January 29, 2022 and January 30, 2021, the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three fiscal years in the period ended January 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 29, 2022 and January 30, 2021, and the results of its operations and its cash flows for each of the three fiscal years in the period ended January 29, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 29, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 23, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the account or disclosures to which it relates.

47


 

 

 

 

Valuation of Schuh Group Indefinite Lived Trademark

Description of the Matter

 

At January 29, 2022 the Company had $22.6 million recorded for the indefinite lived trademark associated with the Schuh Group. As discussed in Notes 1, 3, and 4 to the consolidated financial statements, the Company assesses indefinite lived trademarks for impairment on an annual basis, or on an interim basis if indicators of impairment are present. If the carrying amount exceeds the estimated fair value, an impairment loss would be recorded in the amount equal to the excess.

 

 

 

Auditing the Company’s quantitative indefinite lived trademark impairment test was complex and highly judgmental due to the subjective nature of the significant assumptions used in the determination of estimated fair value for the Schuh Group trademark. For example, the fair value estimate was sensitive to significant assumptions, including royalty rate, and discount rate, which are affected by expected future market or economic conditions and industry and company-specific qualitative factors.

 

 

 

 

How We Addressed the Matter in Our Audit

 

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s trademark impairment evaluation process. For example, we tested controls over the Company’s review of the significant assumptions used in the trademark valuation as well as the Company’s review of the reasonableness of the data used in this valuation.

 

 

 

To test the estimated fair value of the Schuh Group trademark, we performed audit procedures that included, among others, testing the significant assumptions discussed above, testing the underlying data used by the Company in its analyses by comparing to historical and other industry data, as well as validating certain assertions with data internal to the Company and from other sources. We compared the significant assumptions used by the Company to current industry and economic trends while also considering changes to the Company’s business model, customer base and product mix. We assessed the historical accuracy of the Company’s revenue projections by comparing the Company’s past projections to actual performance. We also performed sensitivity analyses to evaluate the impact that changes in the significant assumptions would have on the fair value of the Schuh Group trademark. Finally, we involved a valuation specialist to assist in our evaluation of the Company's model, valuation methodology and significant assumptions, including assisting in evaluating the Company’s royalty rate and discount rate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2001.

Nashville, Tennessee

March 23, 2022

48


 

Genesco Inc.

and Subsidiaries

Consolidated Balance Sheets

In Thousands, except share amounts

 

 

As of Fiscal Year End

 

Assets

January 29, 2022

 

 

January 30, 2021

 

Current Assets:

 

 

Cash and cash equivalents

$

320,525

 

 

$

215,091

 

Accounts receivable, net of allowances of $4,656 at January 29, 2022 and $5,015 at January 30, 2021